UAE rig count up at 40

5/8/2016 6:35:12 PM

(MENAFN- Khaleej Times) The UAE has increased its rig count from 30 to 40 since October 2014 against the drop in North America and around the world.

"The drop in rigs is not limited to North America; around the world the oil rig count has fallen by 31 per cent since October 2014" says Bank of America Merrill Lynch's research report "Global Energy Weekly: The oil supply cliffhanger".

However it said the only region where the oil rig count has been roughly unchanged in the past 18 months has been the Middle East further supporting the industry belief that some Opec members are pursuing a strategy to regain market share over the medium term the bank said.

Both Saudi Arabia and Kuwait have kept the same amount of active oil rigs that these two producers had in fourth quarter of 2014. Opec production has continued to increase but it is no longer offsetting the steep output declines observed across non-Opec members.

Moreover while some Opec players have continued to grow output in recent months maximum production capacity in Iran is set to be reached soon and we see limited scope for further increases until Iranian leaders can manage to attract fresh capital and technology to their ailing industry the research note says.

Meanwhile Saudi Arabia and Iraqi production has recently flattened out and unexpected disruptions in Nigeria declines in Venezuela are all likely to limit Opec supply growth next year.

The question remains as to how growing oil demand will be satisfied. To balance the global market the investment bank's equity research team believes US oil and gas industry capex will have to increase from a low point of $75 billion in 2016 to around $120 billion in 2019.

"In our opinion this kind of increase in capex will require oil prices to be meaningfully above the current forward strip to at least $55 to $70/bbl" the report said.

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