Oil Seen Rising in 2016 by Conoco, Aramco as U.S. Pumps Less

  • Fall in U.S. output to re-balance market, Conoco's Lance says
  • Total CEO forecasts no rebound in crude price before 2017

Oil Falls Below $40 as OPEC Extends Glut

Crude prices will start to recover in 2016 as output from the U.S. and other non-OPEC producers declines, according to the heads of ConocoPhillips and Saudi Arabian Oil Co., the world’s largest oil exporter.

Investment in U.S. oil production will be flat or lower next year, and diminishing output in the country in 2015 and 2016 will help re-balance the global market, ConocoPhillips Chairman and Chief Executive Officer Ryan Lance told reporters Monday at a conference in Doha. Supply from unconventional oil sources, such as U.S. shale deposits, fell this year, Saudi Arabian Oil CEO Amin Nasser said at the same event. 

“There is no additional unconventional oil coming to the market; actually there is a decline,” Nasser said. “So the supply and demand imbalance in the market will adjust and stabilize, and the gap will be closing. And we will be seeing, hopefully, adjustment in the prices going forward starting in 2016.”

Oil has tumbled more than 35 percent in the last 12 months as the Organization of Petroleum Exporting Countries boosted supply in a battle for market share with producers outside the group, including Russia and U.S. shale drillers. OPEC members decided Friday to abandon their collective target of 30 million barrels in daily output after exceeding it for 18 consecutive months, data compiled by Bloomberg show. 

‘Fiscal Discipline’

Brent crude, a global benchmark, slid as much as $1.46, or 3.4 percent, on Monday on the London-based ICE Futures Europe exchange. The contract was 3.2 percent lower at $41.62 a barrel at 3:19 p.m. local time.

Lower prices are affecting Saudi Arabian Oil, known as Saudi Aramco, and the company is taking “fiscal discipline measures” in response, Nasser said. The impact of declining prices on conventional oil projects worldwide will become clear in another four or five years, he said.

U.S. crude supply will decrease by 500,000 barrels a day in 2016 from about 9 million barrels a day at the end of this year, Lance of ConocoPhillips said.

Total SA CEO Patrick Pouyanne said a recovery of prices would take longer as global supply is outstripping demand by about 1 million barrels a day. Output capacity will continue to expand faster than demand next year, he told reporters in Doha.

“We don’t anticipate a recovery in 2016 because the growth of capacity will be larger than the growth of demand,” Pouyanne said. “We have a lot of projects which were sanctioned in 2013, 2014, which continued to be invested. They will come on stream in 2016, 2017, 2018, so you have a global growth of capacity in the industry -- not only in shale oil in the U.S. but globally.”

Before it's here, it's on the Bloomberg Terminal.