Second, those unplanned supply disruptions in Nigeria, Venezuela, Canada and Libya account for another 300,000 barrels of downward revisions.
Last, bottlenecks in the U.S. will are seen preventing American drillers from ramping up production even as prices rise. Those that aim to reverse massive layoffs may struggle to find workers as the United States approaches full employment, Raymond James warns.
Almost since the beginning of the downturn, energy industry recruiters warned that workers who left the oil patch may not return. Unable to staff up, drillers will face challenges in bringing on new supply.
“The reality is at $50 oil where we are today, global supply would barely stay flat, probably even continue to decline,” Molchanov told CNBC’s “Power Lunch” on Monday. “So we need $55, $60 to really stabilize production and then closer to $70 to actually begin to achieve meaningful supply growth.”
Chesapeake Energy co-founder Tom Ward and Petrie Partners Chairman Tom Petrie recently told CNBC that prices need to top $70 a barrel before capital markets embrace the energy sector, allowing it to fund substantial, sustainable new production.
Given his $80 oil call, Molchanov said it’s not time to be defensive. Rather than buy into dividend-payers like Exxon Mobil, he is looking to names like Hess, Marathon Oil, Anadarko Petroleum, Newfield Exploration, Whiting Petroleum, and Continental Resources.
While Morgan Stanley and Piper Jaffray may not be as bullish on oil prices, they too are positive on exploration and production companies.
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