BP forecasts growth in oil demand despite uncertainties.

BP's Bernard Looney forecasts growth in oil demand supported by OPEC+ discipline and lower US production. Despite economic uncertainties, his comments underscore a positive outlook for the oil market.

Share:

“Global oil prices are likely to be supported by growing demand, greater OPEC+ discipline and slower US production growth in the short to medium term, said BP CEO Bernard Looney” on August 1.

Optimistic Forecasts: BP Anticipates Oil Demand Growth Despite Economic Concerns

Despite lingering concerns about the speed of China’s economic rebound after COVID-19 and the risks to global growth from high interest rates, Looney said he expects oil demand growth of over 2 million b/d this year with over 1 million b/d of demand growth in 2024.

Looney also noted that the number of US rigs has fallen from year-ago levels, while OPEC+ looks set to support oil prices, with unilateral production cuts by Saudi Arabia and Russia.

“I can create a very strong case for oil,” Looney told analysts on a quarterly earnings call.

“OPEC+ remains exceptionally disciplined if not increasingly disciplined and shows no signs of changing. You’re also looking at the US, where I think rig counts have fallen to the lowest level since February last year…. So I can create a situation there where you describe the prospects for oil prices to be strong over the coming months and years.”

His comments come a day after Goldman Sachs said it continues to expect Brent crude futures to rise further to $93/b by mid-2024. Supply shortfalls due to record oil demand and Saudi supply cuts are tempered by high OPEC capacity and expected growth in US shale. Brent crude futures were trading at $84.96/b at 1215 GMT on August 1, up around $13, or 18%, since the end of June. Analysts at S&P Global Commodity Insights currently forecast that Dated Brent will average $83/b in July 2024. Platts, part of S&P Global, valued Dated Brent at an average of $85.655 on July 31.

Energy Transition and Volatility: BP Expects Intense Price Fluctuations in the Future

Over the coming months, BP also expects oil and gas price volatility to remain high, said Looney. He pointed in particular to the potential for a recovery in demand for natural gas in Europe this winter following Russia’s invasion of Ukraine, which affected 20% of the population, even though regional gas stocks are currently above seasonal norms.

“I think the only thing you can expect through all these product flows is probably a lot of volatility, probably more than we’ve seen in history,” he said.

Looking ahead, Looney was optimistic that the expected increase in price volatility for its main energy products would boost profits in its commercial divisions.

“I think the only thing you can say as we look to the future in the world…. is that the energy transition is complex and therefore complexity will probably lead to volatility. As everyone knows, volatility is constructive for a trading business,” he said.

Although he expects a more favorable oil price environment in the medium term, Loney said BP will continue to plan financially on the basis of much more cautious expectations for price realization.

“We know there are a lot of uncertainties and so we don’t plan on that basis and that’s why we’re managing the company on the basis of a $40/bbl oil price, a $3/MMBtu Henry Hub price and we don’t intend to walk away from the company on that basis,” he said.

Petro-Victory Energy announces the completion of drilling operations for the AND-5 well in the Andorinha field, Brazil, with positive reservoir results and next steps for production.
The Colombian prosecutor’s office has seized two offices belonging to the oil company Perenco in Bogotá. The company is accused of financing the United Self-Defense Forces of Colombia (AUC) in exchange for security services between 1997 and 2005.
Indonesia has signed a memorandum of understanding with the United States to increase its energy imports. This deal, involving Pertamina, aims to diversify the country's energy supply sources.
VAALCO Energy continues to operate the Baobab field by renovating its floating platform, despite modest production. This strategy aims to maintain stable profitability at low cost.
An empty reservoir exploded at a Lukoil-Perm oil facility in Russia, causing no injuries according to initial assessments pointing to a chemical reaction with oxygen as the cause of the accident.
The British Lindsey refinery has resumed fuel deliveries after reaching a temporary agreement to continue operations, while the future of this strategic site remains under insolvency proceedings.
BP and Shell intensify their commitments in Libya with new agreements aimed at revitalizing major oil field production, amid persistent instability but rising output in recent months.
The private OCP pipeline has resumed operations in Ecuador following an interruption caused by heavy rains, while the main SOTE pipeline remains shut down, continuing to impact oil exports from the South American country.
McDermott secures contract worth up to $50 million with BRAVA Energia to install subsea equipment on the Papa-Terra and Atlanta oil fields off the Brazilian coast.
Saudi Aramco increases its oil prices for Asia beyond initial expectations, reflecting strategic adjustments related to OPEC+ production and regional geopolitical uncertainties, with potential implications for Asian markets.
A bulk carrier operated by a Greek company sailing under a Liberian flag suffered a coordinated attack involving small arms and explosive drones, prompting an Israeli military response against Yemen's Houthis.
The Canadian government is now awaiting a concrete private-sector proposal to develop a new oil pipeline connecting Alberta to the Pacific coast, following recent legislation intended to expedite energy projects.
Petrobras is exploring various strategies for its Polo Bahia oil hub, including potentially selling it, as current profitability is challenged by oil prices around $65 per barrel.
Brazilian producer Azevedo & Travassos will issue new shares to buy Petro-Victory and its forty-nine concessions, consolidating its onshore presence while taking on net debt of about USD39.5mn.
Major oil producers accelerate their return to the market, raising their August quotas more sharply than initially expected, prompting questions about future market balances.
Lindsey refinery could halt operations within three weeks due to limited crude oil reserves, according to a recent analysis by energy consultancy Wood Mackenzie, highlighting an immediate slowdown in production.
The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.