Falling oil prices bring fear of supply shock: CERA

NEW YORK (MarketWatch) — The collapse in oil prices and reductions in production investment could cut the growth in oil supply by nearly eight million barrels a day in the next five years, according to a report released on Friday by Cambridge Energy Research Associates.

About 7.6 million barrels per day out of total potential future growth of 14.5 million barrels per day from 2009 to 2014 are “at risk,” according to the energy research firm’s report, the Long Aftershock.

If all “at risk” supply fails to materialize, world oil production capacity five years from now could reach 101.4 million barrels a day, down from the pre-collapse CERA projection of 109 million.

The steep decline in oil prices has not been matched by an equal decline in the cost of developing new oil fields. This means new production projects could be “slowed down, postponed, or cancelled altogether,” CERA said in a news release.

MarketWatch