Friday 30 September 2016

BP slashes jobs as oil heads for $30 a barrel

Simon Falush

Published 13/01/2016 | 02:30

BP to shed 4,000 jobs as glut and China drag down prices. Photo: PA
BP to shed 4,000 jobs as glut and China drag down prices. Photo: PA

Oil major BP announced plans to cut at least 4,000 jobs in the face of oil's sustained declines.

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Crude oil prices steadied at around $32 per barrel yesterday, recovering slightly as investors booked profits after it fell to a near 12-year low on concerns about oversupply and fragile demand.

Analysts at Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cut their 2016 oil forecasts this week, with Standard Chartered saying oil could fall as low as $10 per barrel.

Oil has been dragged lower by a glut, China's weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for those using other currencies to buy oil.

Benchmark Brent crude fell to a low of $30.43 per barrel, a level last seen in April 2004, before recovering to $32.05, up 50 cents, by mid-afternoon yesterday.

"Oil prices have bounced just over $30 per barrel, in a weak fashion that brings dead cats to mind," Seth Kleinman, head of energy research at Citigroup said.

US crude West Texas Intermediate (WTI) fell to a low of $30.41 per barrel, a level last seen in December 2003, before recovering to $31.77, up 38 cents.

The overall mood of the market remained bearish, analysts said.

Trading data showed that managed short positions in WTI crude contracts, which would profit from a further fall in prices, are at a record high, indicating that many traders expect further falls.

China's slowing economy has also weighed on oil, which has fallen more than 70pc since mid-2004.

And while demand looks fragile, supply from key producers remains robust.

Iraq, the second-biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), plans to export a record of around 3.63m barrels per day from its southern oil terminals in February, said trade sources citing a preliminary loading programme. (Reuters)

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