Lower oil prices continue to plague OSV operators, resulting in lower day rates and utilization. Several operators have reportedly been idling equipment.
And the news will likely get worse before improving in early 2016, analysts say. In a note to clients late last month, Michael Cohen of Barclays slashed the bank’s 2015 Brent crude oil average price forecast to $44 bbl., down 40% from its $72 bbl. forecast in December. Barclays expects prices to rebound to $60 in 2016.
“We expect to see further downside to prices in the next few months, with both WTI and Brent likely to trade in the high $30s before the oil price decline is arrested,” Cohen wrote. Barclays expects a “long period of oversupply” that will stretch at least into early 2016 with only a gradual improvement in global oil market fundamentals before 2016.
The good news is that Barclays expects global oil demand to accelerate in 2016, with the U.S. providing strong demand to offset declines in Europe and Asia.
So there is some hope on the horizon for OSV and rig operators. Hopefully the erosion of day rates and utilization can be minimized until we get there.