RBC’s Helima Croft wrote over the weekend that oil prices are likely to rebound to around $US70 per barrel within two years, and while Croft describes the recovery as a "lengthy, two-tiered process", requiring the oversupply to be erased, and global storage inventories return to normal levels, one of the men who predicted the oil rout, Pierre Andurand, has called the beginning of a bull run on oil prices and the start of the recovery.

He expects oil will lift from near $40 a barrel, rebound to $60-70 this year and $80 in 2017.

Andurand says current prices are not sustainable because large spending cuts are already taking a toll on operational maintenance, and he expects drawdowns from supply to accelerate.

Rystad Energy predicts that the depletion of existing oil fields will outpace new production in 2016, 2017, and 2018.

Norway’s Rystad says that some 3MMbopd will come into the market this year, compared with 3.3MMbopd lost from established fields.

By 2017, the decline will outstrip new output by 1.2MMbopd as investment cuts made during the oil rout start to take effect.

Consultancy Energy Directions agrees, saying that while production continued to increase during December, it was clear the decline curve at mature fields was catching up with production growth.

War, terrorism and political unrest in Nigeria, Iraq, Venezuela, Algeria and Libya are also set to massively disrupt oil production, cutting supply and forcing prices upwards, RBC said.

Iraq the eight largest oil producer in the world and Nigeria is the world's thirteenth biggest.

"The size and duration of possible outages in Nigeria and Iraq - as high as 650,000 barrels per day in sum - would accelerate the first step of erasing the daily oversupply," Croft said.

Nigeria is facing terrorist threats from Boko Haram, and increasing militancy in the Niger Delta.

"President Buhari's decision to cease paying off armed militants and to crack down on criminality has triggered a new wave of attacks on the country's energy infrastructure,” Croft said.

"Currently around 15% of Nigeria's crude output is offline and we believe that this figure could conceivably double in the coming months,” Croft said.

Recently deep-water divers were likely involved in the sabotage of a subsea pipeline to Shell's Forcados export terminal in Nigeria which has knocked out 250,000bopd of exports.

Up to 800,000bopd could be under threat if the new wave of unrest spreads to onshore facilities.

Increasing militancy in Southern Turkey and northern Iraq poses a threat to the critical Iraq-Turkey Pipeline which has been fundamental to the rise in Iraq's output of more than 1MMbopd over the past 12-18 months.

As the Kirkuk-Ceyhan pipeline has been decommissioned because of ISIS attacks, the Iraq-Turkey pipeline is the only northern export pipeline still functioning.

Venezuela, the world's twelfth largest oil producer, faces an inflation rate of 720%, which could lead to economic and political turmoil, while Algeria, the seventeenth largest producer, is facing renewed terrorist threats and recently saw an Al Qaeda attack on the Krebcha gas plant, while Libya, the 29th-largest producer, is "essentially a failed state", Croft said.

Iran is increasing output, and recently passed 2MMbopd, up by 250,000 since March 1.

It has doubled exports since its nuclear accord with the West ended on January 16.

M&

The increasing optimistic outlook for the oil price comes as law firm MinterEllison says there should be more merger and acquisition activity in the Australian resources sector in 2016, including oil and gas related acquisitions and disposals.

Noting the completion of the Beach Energy merger with rival Drillsearch Energy, Sydney-based M&A partner Ron Forster said that the falling oil price will continue to force companies in the sector to reduce costs.

"For those companies with balance sheets under pressure, this year will see more asset sale programs. These will provide opportunities for the better capitalised companies and as a result we are likely to see more M&A activity in the sector."

Private equity is looking at such assets, as are cashed up larger Australian and overseas strategic buyers, Forster said.

On the distressed M&A side, MinterEllison reconstruction partner Michael Hughes said that there was an opportunistic market for distressed sales, and that Santos and Origin were two examples of potential takeover targets given the current market and volatility in oil prices.

"Some resources companies have been forced into a 'care and maintenance' phase for their assets. Even so, they will still require cash over the medium term, failing which other options will need to be considered," Hughes said.

"Timing is a key issue in potential M&A, including taking into account the distressed aspect of the asset."

MinterEllison noted that, as a general trend in the sector, smaller cap oil and gas companies were the most vulnerable because prices had dropped a long way. Also, efforts made to reduce costs had been passed onto the services sector, which has been in the front line of knock-on impacts.

HBSC said last week that overall commodity prices bounced back in March, up 10% overall month-on-month, returning its basket of commodities to where it was in November 2015,

While still down about 20% from 2014 levels, chief economist, Australia & New Zealand, Paul Bloxham, said the pick-up was led by oil prices, which lifted by 21% in March, but was quite broad-based, with 23 of 32 commodities in HSBC’s index rising in the month.

HSBC's commodity forecasts suggest prices are unlikely to fall back to the low levels of early 2016, but the bank still expect prices to remain below their 2015 levels in 2016, on average, as most markets remain over-supplied.

HSBC head of oil and gas research Gordon Gray said oil supply is adjusting aggressively to low prices and oil demand growth has actually been quite strong.

On the supply side, investment in new capacity has fallen sharply and HSBC's oil team are forecasting non-OPEC supply to contract in 2016 for the first time since 2008

Compared to commodities such as iron ore or LNG, many new oil projects are smaller scale, so the supply pullback has been more aggressive.

“Although a near-term price correction cannot be ruled out, we view a return to the low levels of early 2016 as highly unlikely,” he said.