Oil bosses upbeat on market rebound later in 2016, Energy & Commodities...

Page 1 of 3

THE BUSINESS TIMES - businesstimes.com.sg

http://www.businesstimes.com.sg/energy-commodities/oil-bosses-upbeat-on-marketrebound-later-in-2016

http://www.businesstimes.com.sg/energy-commodities/oil-bosses-upbeat-o... 18/02/2016

Oil bosses upbeat on market rebound later in 2016, Energy & Commodities... Page 2 of 3

Oil bosses upbeat on market rebound later in

2016
But BP chief cautions that US$100 oil will not return any time soon
FEB 15, 2016 5:50 AM

London
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, chief executive of British energy major BP, forecast at the
International Petroleum (IP) 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," Mr Dudley told
delegates, acknowledging the vast global supply glut that sent prices plunging
close to 13-year lows under 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.
Mr Dudley cautioned, however, that US$100 oil would not return any time soon.
World oil prices, meanwhile, rose on Friday, with US crude rebounding from a
2003 low to reach almost US$30 per barrel, on reports Opec (Organization of the
Petroleum Exporting Countries) was willing to organise output cuts that could
curb global oversupply.
However, prices have nevertheless slumped by about 70 per cent since mid-2014
with the market awash with crude.
Patrick Pouyanne, chief executive of French oil and gas giant Total, agreed that
prices would charge higher towards the end of the year.
"I think that the price will be higher at the end of the year 2016 than it is today,"
Mr Pouyanne said Thursday at the IP Week conference.
The recent slump in the cost of oil has slashed the profits of energy companies,

http://www.businesstimes.com.sg/energy-commodities/oil-bosses-upbeat-o... 18/02/2016

Oil bosses upbeat on market rebound later in 2016, Energy & Commodities... Page 3 of 3

prompting them to cut or defer investment and axe thousands of jobs.

Total also revealed it would invest up to US$2 billion less in 2016 than originally
planned, as it grapples with ultra-low prices.
"It's quite a crisis that this industry is facing," added Mr Pouyanne.
Mr Dudley meanwhile estimated that about "US$400 billion of projects have been
deferred or cancelled" by the global energy sector in response to the market's
recent collapse. He warned: "That's going to lead to another reaction" in the oil
market.
BP recently posted the group's biggest annual loss in at least 20 years, ravaged by
tumbling oil prices.
Energy companies tended to over-invest in times of high price levels in the
commodity cycle, according to Mr Pouyanne.
"When the prices are high we over-invest, when the prices are high we have an
impact on the demand (but) when the prices are low we under-invest and we have
a positive (impact) on demand," he told delegates.
Mr Pouyanne added: "Clearly we are today in a crisis of an excess of supply, an
excess of capacity, and also because the demand was lower than expected."
The Total boss said that excess capacity stood at two million barrels per day (bpd),
which he added was "not so big" compared to a total market of 90 million bpd.
However, he estimated that about 25 million bpd of new capacity was required
between now and 2020, and cited the impact of declining production from
existing oil fields and increasing energy demand.
Mr Pouyanne warned there would be an estimated shortfall of between five and
10 million bpd by 2020, which he added would also push prices higher in the
longer term. AFP

SUBSCRIBE TO THE BUSINESS TIMES NOW :CALL +65 388 3838 | BTSUBSCRIBE.SG
SPH DIGITAL NEWS
2016 SINGAPORE PRESS HOLDINGS LTD. REGN NO. 198402668E

http://www.businesstimes.com.sg/energy-commodities/oil-bosses-upbeat-o... 18/02/2016