Trend: Demand for oil continues to grow, while supplies continue to dwindle.
Marin Katusa at Safehaven.com describes why oil prices won't go much lower.
Reason 1: "The Big Pinch"
Oil production levels, as well as exports, have been falling in most of the world's top ten supplier nations:
The "Seven Sisters of Declining Exports" – Saudi Arabia, Iran, Nigeria, the UAE, Norway, Venezuela, and Kuwait – share one common characteristic: their oil fields are old. Oil fields don't produce the same amount year after year. They decline significantly from one year to the next because each barrel of oil taken from a reservoir reduces the pressure within the field, leaving less force available to push the next barrel of oil up the well. But don't take our word for it. The following chart shows production from Alaska's North Slope oil field in the past 30 years:
Another example? The Cantarell field in Mexico, which produced 2.1 million barrels per day in 2003, produced just 400,000 barrels last month, a staggering decline of more than 80% in just nine years.