While outages in Canada and Nigeria have helped a rally in oil prices, the outlook for 2017 isn't looking favorable as new projects come online, says Douglas Westwood.
Matt Cook, who has authored the firm's World Drilling and Production Market Forecast (DWD&P) says: “Outages in Canada and Nigeria have helped oil prices rally from record lows, as well as output reductions onshore US due to bankruptcies and Capex cuts amongst shale producers. As such, we anticipate the first decline in onshore oil production since 2009.
“However, 2017 represents a major threat to any oil price recovery. DW predicts offshore oil output will increase 1.8 MMb/d in 2017 as a result of the implementation of projects sanctioned before the downturn. This will probably lead to an increase in the oversupply and suppression of oil prices. Once this backlog of projects is cleared, a reduction in offshore activity is expected – particularly in deepwater plays.
“The deepwater drilling outlook has again been downgraded as a result of the sustained downturn – DW does not expect a significant recovery in activity until well into the 2020s. This will contribute to offshore production expected to peak in 2021 due to a lack of projects in the near-term."
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