|Longer term this will cause oil prices to move higher|
Tuesday, May 24, 2016
Oil discoveries at six decade low
Oil discoveries have fallen to a six-decade low as explorers cut billions of dollars of spending to ride out the biggest market slump in a generation.
About 12.1 billion barrels of oil reserves were found in 2015, marking a fifth consecutive year of decline and the smallest volume since 1952, Oslo-based industry consultant Rystad Energy said in an e-mailed note.
The bottom has completely fallen out for conventional exploration, and the result portends a supply gap in the future that is going to be challenging to overcome,” Smith said. “In the current cost-cutting environment, the outlook for 2016 discovery volumes is not likely to be better, either.”
Depletion of an average 6% per year coupled with demand growth of 1% a year means you need to bring on the equivalent of one Iraq per year to meet oil demand. That will be a problem in a couple of years due to the big cuts in investment in new reserves.