Surplus Production to Diminish, According To BP plc (ADR) (BP) CEO Robert Dudley
BP plc (ADR) (NYSE:BP) CEO, Robert Dudley, said that surplus production should diminish in the oil sector. He foresees such a possibility in the second half of the current year with non-OPEC suppliers preferring to reduce their production to support prices. Until then, he predicted the bearish trend to continue, at least, in the first half of the year 2016. Therefore, he said that the company is ready to meet the challenging pricing environment in the first two quarters of the current year.
Balancing To Start In The Second Half
BP plc (ADR) (NYSE:BP) CEO said that the market would commence balancing the supply and demand gap only in the second part of the year 2016. OPEC has not come forward to slash production to support the price. Instead, the 12-member cartel was more interested in retaining its market share and was ready to boost its share at the cost of margin.
As a result, global oil prices have already plunged 70% from the peak of 2014 to trade around the 12-year below. That, in turn, affected the profit of the companies. As a chain of reaction, oil firms slashed their budgets, dividend rates and even announced big layoffs. During the annual IP Week conference of the oil industry in London, warnings dominated the proceedings.
Worst Is Yet To Come
The bankers, traders, and executives, who have attended the conference, viewed that there was no respite on stockpiling as it was just keep growing. That meant there was no sign of production falling any time soon. Therefore, the worst is yet to come. Rosneft OJSC, Russia’s biggest producer, CEO, Igor Sechin, said that oil supply still exceeded the demand by 1.7 million barrels a day at the international level. He believes that the imbalance could ease towards the end of the current year. That is slightly behind the scheduled forecast by BP plc (ADR) (NYSE:BP) CEO.
While the Russian oil firm thinks that the there could be a possible shortfall of 700,000 barrels per day by the next year end. BP plc (ADR) (NYSE:BP)’s Dudley indicated that he was anticipating to see a quicker tightening of the production.
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