Oil production falling faster than expected

THE US data fuelled fears that demand for commodities will suffer in the global economic recession, which is increasingly seen as likely following the worldwide crisis in financial markets.

In the oil markets, Nymex December West Texas Intermediate fell 2 cents to $63.20 a barrel, retreating from a session high of $65.20.

ICE December Brent lost 21 cents to $61.20 a barrel after trading as high as $62.95 earlier in the session.

However, a draft report from the International Energy Agency (IEA) has claimed that output from the world's oilfields is declining faster than previously thought.Without extra investment to raise production, annual output will decline by 9.1 per cent.

The findings suggest the world will struggle to produce enough oil to make up for the steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet demand in the long term.

The effort will become even more acute as prices fall and investment decisions are delayed. The IEA forecasts that China, India and other developing countries' demand will require investments of $360 billion each year until 2030. The agency says that even with that investment the annual output rate will decline by 6.4 per cent. The decline will not necessarily be felt in the next few years because demand is slowing down, but with the expected slowdown in investment, the eventual effect will be magnified, oil executives said.The IEA warned that the world needed to make a "significant increase in future investments just to maintain the current level of production". - ( Financial Timesservice)