TBE with $80 oil.... Raymond James: Get Ready for $80 Oil "When oil drilling activity collapses, oil supply goes down too!"
https://www.bloomberg.com/news/articles/2016-06-20/raymond-james-get-ready-for-80-oil "First, the analysts see production outside the U.S. being curbed by more than they had previously anticipated, which constitutes 400,000 fewer barrels of oil per day being produced in 2017 relative to their January estimate. In particular, they cite organic declines in China, Columbia, Angola, and Mexico as prompting this downward revision.
"When oil drilling activity collapses, oil supply goes down too!," writes Raymond James. "Amazing, huh?"
Adkins and his fellow analysts also note that the unusually large slew of unplanned supply outages will, in some cases, persist throughout 2017, taking a further 300,000 barrels per day out of global supply.
Finally, U.S. shale producers won't be able to get their DUCs in a row to respond to higher prices by ramping up output, the team reasons, citing bottlenecks that include a limited available pool of labor and equipment.
Combine this supply curtailment with firmer than expected global demand tied to gasoline consumption, and Adkins has a recipe for $80 crude in relatively short order.
"These newer oil supply/demand estimates are meaningfully more bullish than at the beginning of the year," he writes.
"Our previous price forecast was considerably more bullish than current Street consensus, and our new forecast is even more so."