People hoping for higher oil prices over the short-term are living in a "fantasy land", according to a top oil and gas financier.
Industry veteran Peter Gaw, who's the managing director and global head of oil and gas at emerging markets-focussed British bank Standard Chartered, told the 22nd World Petroleum Congress (WPC) in Istanbul, Turkey on Monday (10 July) that the ongoing phase of low oil prices would not evaporate any time soon.
"People need to get real. That includes a number of very respectable oil industry analysts who are predicting a bounce back to $70-80 per barrel oil prices. By all indications, crude production in US is going to exceed 10 million barrels per day (bpd) and there's a lot of oil out there."
Gaw also said the market seems to have a constant obsession about the volume of oil supply and its impact on prices whilst ignoring demand.
"We keep talking about supply. I go to events, conferences, seminars and its all about supply, and it worries the heck out of me that no one seems to contemplate possible clouds on the horizon when it comes to global oil demand."
Gaw was speaking on a WPC panel discussing how oil and gas companies had become relatively conservative in the their financial structure while their capital expenditures for upcoming projects was being cut.
On the same panel, James Peterkin, head of oil and gas (EMEA) at Credit Suisse, said there is every indication that some of the biggest mergers and acquisitions in the energy sector were driven by private equity companies or private, non-publicly-listed companies such as Jim Ratcliffe's Ineos, which recently made successful bids for BP's Forties Pipeline System and Dong Energy's North Sea assets, giving it access to 40% of the North Sea's output.
"This trend looks set to continue, even though significant banking liquidity is available for oil and gas finance despite challenging economic conditions," Peterkin concluded.