EMEA News
Crude Players Say Oil Volatility Set to Stabilize
Oil at the $50 per barrel level may pose a number of difficulties for players, but at least it heralds the end of volatility, two of the world's top oil executives said this week.
Vagit Alekperov, CEO of Russia's Lukoil PJSC, told delegates to the St. Petersburg International Economic Forum the volatility that caused prices to climb to $100 in 2014 and plummet below $28 in January of this year won't be repeated "in the medium term."
He predicted that oil will average $50 this year and $55 to $60 in 2017.
Bob Dudley, CEO of BP Plc, believes oil will climb slightly higher than $50 by year end, describes the current level "very sustainable," and thinks the market will be balanced by the end of this year.
Another Economic Forum attendee, Rainer Seele, chief executive officer of OMV AG, believes crude will average $40 this year and $55 next year; more conservative still are the predictions of Alexander Novak, energy minister for Russia, who pegs next year's average price at $50 due to "a lot of oil in the world."
For the record, Igor Sechin, CEO of Rosneft, told Forum delegates that a re-balancing is more likely in 2017 than the end of this year.
Despite the variations of predicted prices, it's notable that these commentators seem to be adhering to a "lower for longer" outlook that was most recently expressed by Fadel Gheit, analyst for Oppenheimer, who said that recent and future mergers amongst crude producers is a way of surviving low, sustained prices.
Goldman Sachs is also amongst the ranks of those who think oil won't climb much farther than $50, but Paul Hornsell, head of commodities research at Standard Chartered, says this level poses several major problems, not the least of which is it being too low to lure fresh investors and too high to force more production offline.
