Alejandro Barbajosa

Dec. 19 (Bloomberg) — Goldman Sachs Group Inc. analyst Arjun Murti, who roiled oil markets in March by saying crude may reach $105 a barrel, now says that may be conservative if the “peak oil” theory is right and world supplies are running out.

OPEC, the source of about 40 percent of the world’s oil, is letting inventories accumulate by ignoring its own output quotas, which are “now obsolete,” the group’s President, Sheikh Ahmad Fahd al-Sabah, said yesterday.

Oil demand this year will rise faster than expected because of cold weather and growing economies in the U.S. and China, straining the ability of producers to keep pace, the International Energy Agency said.

A 15-year decline in oil reserves is spurring companies such as Royal Dutch/Shell Group, Exxon Mobil Corp. and ChevronTexaco Corp. to spend $76 billion in the next decade to boost supplies of oil from tar sands and diesel fuel from Qatari natural gas. Oil executives say they have no choice but to try alternatives to drilling because there is not much more crude to be found in their current fields.

Solid article detailing the higher costs of oil sands and industry pressures driving project investments. Includes as context many startling figures: “Shell, based in London and The Hague, reported Feb. 3 that reserves fell in 2004 because it found enough oil to replace just 15 percent to 25 percent of what the company pumped. BP replaced 89 percent of production, the company said Feb. 8”.

Crude oil rose close to a record on concern that refiners will lack the supplies to meet demand for heating fuel during the northern hemisphere winter.