LONDON, Aug 1, (Agencies): BP expects global oil prices to hold within a range of $45-$55 a barrel next year as US shale production grows, the British company’s chief financial officer said on Tuesday.
After a slow start to the year, global oil demand recovered in the second quarter of 2017 and was expected to grow by 1.4 to 1.5 million barrels per day, Brian Gilvary told Reuters.
“Global demand is looking pretty strong, and prices will firm around the levels seen today,” he said.
Brent crude oil prices averaged $51.71 a barrel in the first half of 2017 and are currently just below $53 a barrel.
Global demand was at around 95 million bpd in 2016.
Brent crude oil prices were expected to remain broadly unchanged in 2018 as US shale production is able to expand at these levels, effectively capping prices.
“We can now see where the price elasticity is. As the price comes up to $52-$53 a barrel we start to see some uptick in activity, as it drops to $45, we start to see that curtailing.”
“For 2018 something around $45-$55 a barrel is probably a good range,” Gilvary said.
BP returned to profit in the second quarter on slashed charges linked to the Gulf of Mexico oil spill disaster and on firmer crude prices, the energy giant said Tuesday.
Net profit stood at $144 million (122 million euros) in the three months to June 30 compared with a loss after tax of $1.4 billion in the second quarter of 2016, the British group said in a results statement.
It noted however that profits were capped by larger tax payments this time around and an exploration write-off in Angola. Looking ahead, chief executive Bob Dudley said BP would continue with a “tight focus on costs, efficiency and discipline in capital spending”.
Oil companies are cutting investments and jobs in addition to selling off non-core assets after a tough few years that saw crude prices crash prior to the start of their recovery over the past 12 months.
The average price of benchmark North Sea Brent oil rose to $49.64 per barrel in the second quarter from $45.59 per barrel a year earlier, BP said in its statement.
In the second quarter, the latest Gulf of Mexico oil spill charge before interest and tax came in at $347 million, far lower than the hit of $5.1 billion a year earlier.
“While net debt rose primarily due to Gulf of Mexico payments, we expect this will improve over the second half as these payments decline and divestment proceeds come in towards the end of the year,” BP chief financial officer Brian Gilvary added in Tuesday’s statement.