The balance between demand and supply in the oil market will shift earlier than previously expected due to OPEC's output cuts, with prices heading towards $60 a barrel (bbl) next year, Eldar Saetre, CEO of Statoil ASA (NYSE: STO), said on Dec. 6.
Brent crude futures hit $55/bbl on Dec. 5, the highest level since July 2015, after OPEC agreed on Dec. 1 to curb production by 1.2 MMbbl/d from January.
"It means that the rebalancing of the market can come at an earlier point in time than we previously expected," Saetre told Reuters on the sidelines of an energy conference.
"We basically have indicated that the rebalancing will start at some point during 2017. I think this [OPEC agreement] will push it to the front of 2017 as this agreement comes into effect," he added.
As a result of demand catching up with supply, oil prices are expected to rise to towards $60/bbl, spurring more oil production from U.S. shale.
"There will be volatility, and at some point we will see higher prices driven by lack of investments," Saetre said, adding that increased output from the U.S. will not be enough to compensate for historically low global investments.
"At some point we will see higher prices [than $60/bbl]... because of deferred investments, but I don't think you will see the impact of this next year, because the time horizon is longer," he said.
Recommended Reading
Canadian Railway Companies Brace for Strike
2024-04-25 - A service disruption caused by a strike in May could delay freight deliveries of petrochemicals.
Talos Energy Expands Leadership Team After $1.29B QuarterNorth Deal
2024-04-25 - Talos Energy President and CEO Tim Duncan said the company has expanded its leadership team as the company integrates its QuarterNorth Energy acquisition.
Energy Transfer Ups Quarterly Cash Distribution
2024-04-25 - Energy Transfer will increase its dividend by about 3%.
Guyana’s Stabroek Boosts Production as Chevron Watches, Waits
2024-04-25 - Chevron Corp.’s planned $53 billion acquisition of Hess Corp. could potentially close in 2025, but in the meantime, the California-based energy giant is in a “read only” mode as an Exxon Mobil-led consortium boosts Guyana production.
CNX, Appalachia Peers Defer Completions as NatGas Prices Languish
2024-04-25 - Henry Hub blues: CNX Resources and other Appalachia producers are slashing production and deferring well completions as natural gas spot prices hover near record lows.