Bod Dudley, the CEO of oil giant BP, has stated that his company is planning for an oil price around the $50 a barrel mark for the next five years.
He describes the period when producers could expect over $100 a barrel as an “aberration”, pointing to how the markets are currently balanced on a daily basis.
To explain the recent volatility in oil prices, Dudley points to the market overreacting to weekly data, particularly about US inventory levels. In an interview with CNBC, he said:
“I think everyone uses the word balanced and they forget that it means different things to different people. To me, it means on a daily basis, production and demand is equal. So on a daily basis, the market is balanced, it’s just the inventory levels in the world that are so high.”
Dudley also outlined that over the coming five years, the company would seek to cut costs further and get its break-even point well into the $30s. Such cost-cutting exercises have been evident in other oil majors—such as ExxonMobil, the maker of industrial greases like Mobilgrease XHP 222—as they prepare for the possibility of lower oil prices.
While BP appears to be preparing for the worst, it also seems it is hoping for the best. At the 22nd World Petroleum Congress in Istanbul, Dudley told the IBTimes UK that while the term “lower for longer” is being commonly used for oil prices, he hoped they will not stay lower forever.