Raymond James Energy Stat of the Week
by J. Marshall Adkins
Energy Stat: How Important Are 5 MMbpd of Oil Project Delays/Cancellations to Our Oil Model?
August 3, 2015
The fall in long-lead-time oil project economics over the past year has led to a massive amount of cancellations and delays of previously announced projects. Looking at the headline numbers, there has been a massive 5-6 MMbpd of project cancellations or deferrals announced since the oil downcycle began. If we parse the data more accurately to include only the projects that were included in our global oil supply forecast, then the massive oil supply impact shrinks dramatically (versus the headline numbers) and is pushed out to have an effect in 2017 and beyond. Specifically, we think global oil supply relative to our current oil model could be 300 Mbpd lower in 2017, 500 Mbpd lower in 2018, and 750 Mbpd lower in 2019. Even though these numbers are much smaller than the 5+ MMbpd headline numbers, they still represent a more bullish oil price outlook for 2017 and beyond than our current model. We will have more on that in upcoming reports.
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