March 20 (Bloomberg) -- Oil and gas explorers postponing or scrapping deep water drilling projects are potentially reducing crude supplies by as much as 2.4 million barrels a day in 2011, Morgan Stanley said.

Deep water ventures that were planned as of August would have added 6.3 millions barrels a day to global oil supplies, and so far projects that would have provided 2.4 million barrels have been canceled or delayed, analysts Martijn Rats and Robert Pulleyn said in a report today. The amount of future production lost is about 90 percent of India’s demand.

“Lower oil prices and the weaker credit market have had a detrimental impact on the offshore construction market,” the analysts said. Contracts for new floating platforms may halve to 10 this year from 19 last year, they said.

No new contracts have been awarded since last August when Morgan Stanley estimated that companies needed 139 new production platforms to develop fields in deep seas, the report said. Since then 11 orders were canceled and 46 delayed by an average 15 months, it said. Crude oil has declined 65 percent since reaching a record $147.27 a barrel in July.

Drilling activity has dropped, with 2,753 rigs operating worldwide at the end of February, 19 percent fewer than a year earlier and 221 below January’s level, according to Baker Hughes Inc, the third-largest oilfield services company.

Oil climbed above $50 a barrel yesterday to close at a three-month high after the Fed said it was seeking to purchase U.S. Treasuries, mortgage-backed bonds and other debt. Crude has fallen more than 65 percent since a record last July.

“We maintain a particularly bearish stance on crude oil into the second quarter, suggesting further volatility in coming months before a sustainable recovery starts later in the year,” the analysts said.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net

Last Updated: March 20, 2009 02:11 EDT