The CEO of BP believes the market is currently balanced and production is meeting demand on a daily basis despite recent volatility in the price of oil.
"I think everyone uses the word balanced and they forget that it means different things to different people. To me, it means on a daily basis production and demand is equal. So on a daily basis, the market is balanced, it's just the inventory levels in the world that are so high," Bob Dudley, chief executive officer of BP said during a television interview.
After a cut in the U.S. government's forecast for output in 2018 and after a drop in U.S. fuel inventories, oil prices were higher on Wednesday. After reports that Saudi Arabia had produced above its output gap, the commodity moved lower on Tuesday. On a bearish U.S. inventory report, oil reached a 7-month low in June.
An ongoing volatility has been created due to the current flow of data. Markets need to stop taking into account data on a weekly basis, according to Dudley.
"You can't do it weekly, which is what the market is doing, particularly focusing on the U.S. inventory levels," he added.
WTI jumped 1.7 percent being sold at $45.83 and Brent was up by 1.5 percent being sold at $48.27.
The company will only need a crude price of $30 a barrel to cover spending and dividends as it puts its books in order, but it will plan for an average of $50 a barrel in the next five years, BP's Dudley said.
"For us, we're going to plan around ($)50 for five years, get the discipline and the capital discipline in place, get our costs down and we will get our break-evens well into the 30s," he said.
In order to shore up its position after the 2010 oil spill in the Gulf of Mexico, BP is trying to raise output and keeping capital spending at no more than $17 billion.
On Wednesday morning, BP shares were up by 1.9 percent on Wednesday morning.
Recently, oil prices have also been affected by an OPEC-led deal to freeze output and to boost market prices.
For example, demands of a gradual exit from the OPEC's output cap deal have been placed by Kazakhstan. A pledge to reduce output until March of next year was made by the country, just like Russia and other OPEC members. In order to revise the OPEC deal if needed, it is ready to assess new proposals, Moscow has also indicated recentnly.
Such comments cast doubts over the stability of the deal.
"I think it's way too early," Dudley said about the continuity of a freeze in output. "We won't actually know until March of next year," he said.
OPEC ministers will be meeting in Vienna on July 24th.
(Source:www.cnbc.com)
"I think everyone uses the word balanced and they forget that it means different things to different people. To me, it means on a daily basis production and demand is equal. So on a daily basis, the market is balanced, it's just the inventory levels in the world that are so high," Bob Dudley, chief executive officer of BP said during a television interview.
After a cut in the U.S. government's forecast for output in 2018 and after a drop in U.S. fuel inventories, oil prices were higher on Wednesday. After reports that Saudi Arabia had produced above its output gap, the commodity moved lower on Tuesday. On a bearish U.S. inventory report, oil reached a 7-month low in June.
An ongoing volatility has been created due to the current flow of data. Markets need to stop taking into account data on a weekly basis, according to Dudley.
"You can't do it weekly, which is what the market is doing, particularly focusing on the U.S. inventory levels," he added.
WTI jumped 1.7 percent being sold at $45.83 and Brent was up by 1.5 percent being sold at $48.27.
The company will only need a crude price of $30 a barrel to cover spending and dividends as it puts its books in order, but it will plan for an average of $50 a barrel in the next five years, BP's Dudley said.
"For us, we're going to plan around ($)50 for five years, get the discipline and the capital discipline in place, get our costs down and we will get our break-evens well into the 30s," he said.
In order to shore up its position after the 2010 oil spill in the Gulf of Mexico, BP is trying to raise output and keeping capital spending at no more than $17 billion.
On Wednesday morning, BP shares were up by 1.9 percent on Wednesday morning.
Recently, oil prices have also been affected by an OPEC-led deal to freeze output and to boost market prices.
For example, demands of a gradual exit from the OPEC's output cap deal have been placed by Kazakhstan. A pledge to reduce output until March of next year was made by the country, just like Russia and other OPEC members. In order to revise the OPEC deal if needed, it is ready to assess new proposals, Moscow has also indicated recentnly.
Such comments cast doubts over the stability of the deal.
"I think it's way too early," Dudley said about the continuity of a freeze in output. "We won't actually know until March of next year," he said.
OPEC ministers will be meeting in Vienna on July 24th.
(Source:www.cnbc.com)
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