Schlumberger Calls the Bottom for Oil Market....

The world's largest oilfield services provider stated on its Q2/16 conference call that the oil industry appears to have reached the bottom of the cycle and is poised for modest growth the rest of this year. Notably, Schlumberger expects a "significant global supply deficit" of crude oil, assuming steady growth in demand, given the sharp decline in spending on exploration and production. Recall that energy companies have halved their E&P budgets since oil prices began their slump in June 2014. Schlumberger's CEO went on to state that "as the opportunities for activity high-grading are exhausted, we should see a further acceleration in the global production decline." Regarding pricing, Schlumberger is now shifting its focus to renegotiating contracts with explorers and trying to recover some of the discounts it was forced to give during the downturn. This is a positive sign for other oilfield services providers trying to increase pricing and clearly signals that there is some appetite among E&P's to renegotiate contracts, Overall, given Schlumberger's credibility as the dominant global oilfield services provider, calling the bottom in the market is a very positive signal for the energy industry as a whole.