Movers and shakers from the oil industry descended on London last week and expressed optimism over a sharp rebound in the beleaguered crude market later this year.
Bob Dudley, CEO of British energy giant BP PLC, said at the International Petroleum Week industry conference on Wednesday that “the daily [oil] supply and demand” will be balanced in the second half.
“Every storage tank and swimming pool will be full of oil,” Dudley told delegates, acknowledging the vast global supply glut that sent prices plunging close to 13-year lows of less than US$27 per barrel last week.
“And then ... the market starts to pull the plug, and I think we will begin to see the fundamentals [of supply and demand] take over,” he said, indicating prices would pull higher in the third or fourth quarter.
However, US$100 oil would not return any time soon, he said.
Patrick Pouyanne, CEO of French oil and gas giant Total SA, agreed that prices would charge higher toward the end of the year.
“I think that the price will be higher at the end of the year 2016 than it is today,” Pouyanne said on Thursday at the conference.
The recent slump in the cost of oil has slashed the profits of energy companies, prompting them to cut or defer investment and axe thousands of jobs.
Total also said that it would invest up to US$2 billion less this year than originally planned, as it grapples with ultra-low prices.
“It’s quite a crisis that this industry is facing,” Pouyanne added.
Meanwhile, Dudley estimated that about “US$400 billion of projects have been deferred or canceled” by the global energy sector in response to the market’s recent collapse.
“That’s going to lead to another reaction” in the oil market, he said.
Energy companies tended to over-invest in times of high prices in the commodity cycle, Pouyanne said.
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