BP CEO ‘very bearish’ on oil as storage tanks are filling up

LONDON (Bloomberg) -- BP is planning for oil prices to stay low for the first six months of the year and expects surplus production to only start diminishing when storage tanks fill up in the second half.

“We are very bearish for the first half of the year,” CEO Robert Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in. The market will start balancing in the second half of this year.”

More than a year into a downturn sparked by OPEC’s decision to keep pumping to defend market share, prices are still 70% below their 2014 peak and companies are beset by plunging profits, dividend cuts and mass layoffs. As the oil industry gathers in London for the IP Week conference, bankers, traders and executives are warning that worst of the slump isn’t over. Crude could fall “into the teens,” according to Goldman Sachs Group Inc.

Global oil supply exceeds demand by as much as 1.7 MMbpd, Igor Sechin, CEO of Russia’s largest producer Rosneft OJSC, said at the conference. The imbalance will probably ease by the end of this year and potentially become a supply shortfall of 700,000 bopd by the end of 2017, he said.

BP expects to see “a faster tightening” than Rosneft, Dudley said.