$60 Oil Possible in 2017

$60 Oil Possible in 2017

Oil supply growth by OPEC countries will not match the output declines being experienced by non-OPEC producers and this could lead to higher crude prices next year, says a report.

To balance the oil market by 2020, US oil and gas capital expenditure will have to increase by at least 50%, leading oil prices to trade above the current forward strip and into a $55-70 per barrel range, said the  report by Bank of America Merrill Lynch titled “Global Energy Weekly: The Oil Supply Cliffhanger”, Trade Arabia reported.

There is still a large set of drilled but uncompleted shale wells that could come on stream over the next few months and US companies are expected to play a role in stabilizing non-OPEC supplies, it explained.

However, OPEC producers at the moment have limited spare productive capacity or planned investment to meet demand on a forward basis, leaving the oil market exposed to huge supply uncertainties over the next five years, it said.

“One fact remains in this OPEC cliffhanger: non-OPEC oil supply is indeed hanging off a cliff. We estimate global output is set to contract year-on-year in April or May for the first time since the first quarter of 2013 as OPEC growth no longer offsets non-OPEC declines,” the report added.

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