The growing fear of an oil surge to more than $ 150 US | Economy | markets

Oil investors may be sorry to have invited companies to distribute cash instead of investing in growth for the future since the scarcity of exploration creates the framework of an unprecedented increase in the price of crude, according to Sanford C Bernstein & Co.

Companies had to focus on increasing yields and shareholder compensation at the expense of capital expenditures to find new sources, badysts said Friday in a note. Neil Beveridge.

This reduced the reserves of the major producers and the sector's reinvestment coefficient dropped to the lowest level of a generation, which opens the way for higher oil prices than the records achieved during the past decade. last decade, according to Bernstein.

"Investors who have pushed management teams to control spending on capital goods and bring in money will regret the underinvestment in the sector," badysts said.

"Any shortage of supply will cause a sharp rise in prices, perhaps much higher than the increase of $ 150 per barrel observed in 2008."

The world's leading oil companies, such as Royal Dutch Shell Plc and BP Plc, have weathered the 2014 price slump by cutting costs, selling badets and borrowing to satisfy investors with investors. high dividends.

This year, shareholders punished the biggest of them, Exxon Mobil Corp., by combining disappointing results with a large spending plan and the lack of buybacks.

The global overabundance of crude in recent years has hidden a "chronic underinvestment," Bernstein said in the report. Oil rebounded at the highest level in more than three years, as the Organization of Petroleum Exporting Countries (OPEC) and its allies began cutting production early last year to reduce a global oversupply.

Producers now plan to extract more to help cool the market, but disturbances in Libya and Venezuela are keeping prices high.

Proven reserves of the world's major oil companies have fallen by more than 30% on average since 2000, while only Exxon and BP show improvement through acquisitions, Bernstein said. On the other hand, more than 1,000 million people will be urbanized in Asia over the next 20 years, which will boost the demand for cars, as well as air transport, road transport and plastics, which also require oil, according to Bernstein.

"If oil demand continues to increase until 2030 and later, the strategy of returning money to shareholders and investing insufficiently in reserves will only sow the seeds. seeds of the next super cycle, "the badysts wrote. "We will have to keep the companies that have barrels on the ground to produce, or the services to extract them, and give up the others."

Brent crude reached a record level of more than US $ 147 in 2008 because the nascent growth in demand and the lack of available resources immediately resulted in a synchronized increase in all incoming commodities. the name of the super-cycle.

The world reference variety was trading this Friday at 77.31 US dollars a barrel at 9:06 in London, an increase of about 60% in the last 12 months.