Industry and Energy

Home page

Industry and Energy

BP’s chief economist: Oil market might return to last yearâ€™s level in three years

21 April 2009 10:44 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Spare capacity in oil markets could weigh on the price for years, Telegraph quoted BP’s chief economist Christof Ruehl as saying ahead of an energy conference in Dubai.
Mr Ruehl said he expected that the price would be supported by lower inventories in the second half of 2009, but a supply "cushion" meant that even if economic growth returned the oil price would not rally sharply.
"Even if we went back to the demand growth rates of the past few years, it would take three years to get back to a market that was as tight as last year. And global growth is unlikely to return to the stellar levels of the last few years," Mr Ruehl said.
The economist predicted that spare capacity would hit 6m barrels per day, compared with 2.3m barrels per day a year ago. However, he said oil prices could stay over $50 a barrel if Opec stuck to its quota cuts and the global economy stopped contracting. The oil price fell from $147 in the middle of last year to Â£32.40 in December as the global economy unravelled. In London, Brent crude fell $3.14 to $50.21 a barrel yesterday.
Oil companies have been hit by falling oil prices at the same times as costs were rising. Mr Ruehl said that costs would fall, but they would lag the fall in the oil price by 18-24 months.
"What we have in 2009 is a year of two halves. The first half was pretty terrible and the second half is likely to be stabilising in the sense that the global contraction is likely to stabilise," according to the economist.