Uh-oh. Worldwide oil discoveries bottom out
Let's look beyond today's oil market that's basically swimming in crude. The International Energy Agency is out with new data this morning to back up warnings from its analysts — and other forecasters — that an oil supply crunch could loom in just a few years.
Bottom line: Industry spending cuts during the low-price cycle helped drive new global crude discoveries to a record low last year, and the trend could continue this year. Meanwhile, approvals for new conventional oil production projects have fallen to their lowest level in decades too.
Why it matters: The IEA notes that with global oil demand growing, an "extended period of sharply lower oil investment could lead to a tightening in supplies." The U.S. shale boom might not pick up the slack for slow growth elsewhere.
- They're not alone in warning that the global supply-demand balance could get really dicey in a few years. Check out my previous story on expert warnings for more on this topic.
The details: Modest prices are stymieing development outside the shale patch. Discoveries fell to 2.4 billion barrels last year, well below the 15-year average of 9 billion, according to IEA.
The number of new projects that received final green lights for investment fell to the lowest level since the 1940s, IEA said, warning that both trends could continue this year.
What they're saying: "The key question for the future of the oil market is for how long can a surge in U.S. shale supplies make up for the slow pace of growth elsewhere in the oil sector," IEA executive director Fatih Birol said in a statement alongside the new data.
Not for nothing: A short new report from the U.S. Energy Information Administration illustrates how central the Permian Basin shale region has been to U.S. production increases — and preventing even further drops during the oil price doldrums the market recently emerged from.
- The report shows how it's the one U.S. onshore region where production consistently climbed in 2015 and 2016.