See this from the FT on March 30th:
‘Chinese oil major PetroChina plans to raise capital investment to RMB191.3bn ($28bn) in response to recovering oil prices, up from RMB172.4bn last year, in the latest sign of recovery for the oil sector.’
This kind of confidence is driven by predictions of a major recovery in oil production which, incidentally, will add to the Scottish oil industry recovery I’ve written about numerous times recently. See:
‘Oil Market Rebalancing, Demand Expected to Rise’ One reason for Yes next time.
Yesterday, ‘data and analytics firm’, McKinsey predicted that oil prices will rebalance at $60 to $70 per barrel. This is well above the $50 per barrel current minimum for viability which itself may be higher than that required for new, smaller, technologically smarter companies and could see cash flowing into the UK Treasury again if we’re not quick to get out of the UK. See this from the Harvard Business Review in March 2016:
‘Nobody really knows what oil prices will be in the future, but we think countries and companies should prepare for oil to hover around $50 per barrel for the foreseeable future. Historically this wouldn’t be shocking at all. In fact, today’s oil prices that we think of as low are actually near the real average price of a barrel of oil for the last 150 years: $35 (2014 US dollar reference year).’
The FT finishes with these further confident comments:
‘The report predicts the level of decline in legacy production from the Bakken [North Dakota USA] and Eagle Ford fields [South Texas] will reduce oil oversupply……New production sources are expected to become more economic than 2014 levels, due to cost-cutting strategies which were introduced during the downturn.’