In the calculus of oil prices, Wall St. often factors in supply interruptions that could come from political instability and terrorism. But, what if selective large reserves simply start to run out, without much warning?
Mexico’s largest oil field, one of the biggest in the the world, suffered a huge drop in production during 2006. According to industry experts, the decline will continue.
The news comes as somewhat of a surprise. And, the supply and demand metrics that move oil prices are often unsettled by unexpected news.
Watch for the price of oil to move higher, and, if the news from Mexico gets worse, cost-per-barrel could sit at a higher level for awhile.
Douglas A. McIntyre can be reached at douglasacmcintyre@247wallst.com.
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