2016's Lowest Bunker Prices Could be in Q1, Latest Thinking from BP Suggests

BP chief executive Bob Dudley says a low point for oil could be in the first quarter of 2016.

Chronically low bunker prices could see their lowest point of the slump in Q1 2016, predictions from energy major BP suggest, with chief executive Bob Dudley telling media this week he believes the price of oil will not drop below $30 per barrel and a better balance between supply and demand will be achieved later this year.

Dudley, who believes global oil prices will bottom out in early 2016, said "a low point could be in the first quarter."

Dudley pegged the third or fourth quarters of 2016 as the periods in which a more neutral balance between supply and demand could occur.

At the end of December 2015 IFO380 in Rotterdam fell to around 50 percent of the cost of crude, and ended the year at 48.5 percent of the Brent per metric tonne (pmt) price.

At those levels, $30 oil would equate to bunkers at $110 pmt.

On Monday Rotterdam IFO380 was priced at $142 pmt, according to Ship & Bunker indications.

"Prices are going to stay lower for longer, we have said it and I think we are in this for a couple of years; for sure, there is a boom-and-bust cycle here," he said.

Dudley's comments fall in line with those of Tord Lien, oil minister for Norway, who last August said $40 per barrel crude was unsustainable and that prices would inevitably rise when supply is reduced.

Dudley also went on record as saying that Mark Carney, governor of the Bank of England, was overstating the problem when he recently suggested oil companies might be stuck with reserves that may never be tapped because of the new global emissions limits.

The chief executive nevertheless noted that the world faces a "really difficult problem" in reducing emissions while producing enough energy for a growing population.

In a longer-term view, the Organization of the Petroleum Exporting Countries in its latest World Oil Outlook predicts oil prices will rise from $70 per barrel in 2020 to $95 per barrel by 2040.