The extent to which this view is built upon analysis of data or gut feel is unknown (and in all likelihood there is a bit of both) but Douglas-Westwood’s analysis of its own drilling & production (D&P) data supports this view.

DW said it expects to see a fall in US production this year of nearly 900,000 bpd, the largest drop in output for a country since Libya in 2011 (civil war) and Saudi Arabia in 2009 (OPEC cuts). There will be production growth in a number of countries, the most-significant being Iran and Iraq, with the result that overall global production will increase by 460k bpd. With demand growth forecast at 1.2 million bpd this year, the overall net position is a reduction in net over-supply of some ¾ million bpd. This reduction in over-supply should put upward pressure on oil prices as it develops over the course of the year, the intelligence group explained.

So can we expect the same trend to continue into 2017, Douglas-Westwood asked. Analysis of the data (which is built-up on a project-by-project basis) suggests not. Whilst there will be further demand growth, this will be offset by significant production. DW anticipates net increases in production both onshore and offshore. Most of the additional volumes are from offshore (net 1.1 million bpd increase) with an overall impact (taking into account demand growth) of a slight increase in over supply in 2017. In the years that follow, DW expects reduction in over-supply every year to 2020.

Why the blip in 2017? Put simply, DW said, we are not over the hangover from several years of record levels of industry spend (2011-2014). Major projects were committed to at that time and the lead times for some of these projects are long. But this dynamic works both ways. The current hiatus in spend is brewing a major supply problem towards the end of the decade – if nothing changes, DW noted, the data suggests under-supply of oil by 2020.