Crude price volatility to continue - oil chiefs
Crude markets will continue to be plagued by volatility in the short and medium term after suffering the biggest downturn in a generation over the past two years, according to oil-company executives gathering for one of the industry's biggest conferences in Norway.
"The volatility is here to stay," ConocoPhillips chief executive officer Ryan Lance said on the sidelines of the ONS Conference in Stavanger yesterday. He said market rebalancing "will extend into 2017. The inventory levels are still quite high."
The industry remains on guard as oil entered a bull market on August 18, less than three weeks after tumbling into a bear market.
Prices have gained 19pc in the past four weeks on speculation Opec nations and other producers could agree to cap output at a meeting in Algeria next month.
While markets are expected to rebalance as they gradually absorb a glut of crude stocks, analysts differ over the timing.
"Basically, volatility is the word," said Martin Bachmann, head of exploration and production in Europe and the Middle East at Wintershall.
"There will be a rebalancing. Over what timeframe is the big question."
It may take time for markets to strengthen and there will be great uncertainty in the meantime, Statoil ceo Eldar Saetre said.
Some industry observers are more optimistic.
Daniel Yergin, vice chairman of consulting firm IHS, said oil supply and demand will balance this year, adding that spending on onshore oil and gas will rise in 2017.
"The rebalancing in the oil market is already happening," according to Norway's Petroleum and Energy Minister Tord Lien. Still, "parts of the supplier industry will continue to have demanding months ahead".
Oil declined yesterday amid doubts producers will agree on a deal to stabilise the market when suppliers meet next month for informal talks. (Bloomberg)