RayJa Bullish on Oil | Russell T. Rudy Energy LLC
According to a recent article in “Rigzone”, if you like current oil prices, you will love the latest forecast by Raymond James & Associates (RayJa). The investment firm predicts that what we are seeing is just the beginning of a major upturn in prices. While this by no means represents a consensus among industry analysts, it is encouraging. The company believes that the market is tightening as supply is falling and demand is strengthening.
RayJa bases their supply forecast on three factors: falling foreign production, unanticipated supply outages, and drilled but uncompleted (DUC) wells staying off line. They see demand as driven by greater than anticipated gasoline consumption.
The company sees non-U. S. production dropping by 400,000 barrels of oil per day (bopd) in 2017, much more than previously anticipated. Specific shortfalls are now expected in China, Columbia, Angola and Mexico, due to the current down turn in drilling activity in these countries.
Secondly, RayJa does not see the unusually large number of unplanned global supply disruptions as temporary. In some cases, they see these kinds of problems persisting through 2017 and reducing global supply by an additional 300,000 bopd.
Finally, the firm does not see higher prices resulting in a surge of completions of DUC wells as many analysts have assumed. Rather, RayJa contends that logistical bottlenecks, and a shortage of equipment and manpower, will delay any significant completion activity.
As a result of all this, RayJa sees crude oil prices reaching $80 by the end of this year, but moderating to an average of $70 in 2017.
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=145179&utm .
