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00:00UNTIL THE ECB GETS OUT OF THE MARKET, WE ARE NOWHERE NEAR THE RIGHT PRICE. FRANCINE: COULD THAT MEAN WE HAVE A NASTY MARKET REACTION GENERATED BY EUROPE THIS TIME? > > THE STORY OF 2018 IS GOING TO BE THE ECB TRYING TO WATER IT DOWN. THAT IS WHY THEY ARE NOT GOING TO STOP BEFORE SEPTEMBER. THAT IS WHY THEY ARE NOT GOING TO RAISE RATES UNTIL THE FIRST HALF OF NEXT YEAR. FRANCINE: IS MARIO DRAGHI REALLY THE SAVIOR OF EUROPE? IT IS ALMOST THANKS TO THE ECB THAT WE DON ' T REALLY SEE SPREADS WIDENING. IT IS 100% THANKS TO THE ECB. > > HE ' S DONE A GREAT JOB STOPPING THE EXISTENTIAL CRISIS. YOU CAN SAY THE FRENCH ELECTORATE HAVE DONE A GREAT JOB STOPPING THE DANGER THAT POPULISM DRAGS A MAJOR ECONOMY OUT OF THE EURO. I DON ' T THINK THE ITALIAN ELECTION IS A MAJOR THREAT TO ITALY BE IN PART OF THE EURO. FRANCINE: LET ' S SAY THERE ' S SOME KIND OF COALITION THAT DOESN ' T DELIVER REFORM. > > HOW MANY ITALIAN COALITIONS HAVE NOT DELIVERED REFORM? FRANCINE: WHAT DO YOU MEAN? [LAUGHTER] > > WE CAN LIVE WITH DOMESTIC PROBLEMS IN ITALY. FRANCINE: IT IS AN ITALIAN PROBLEM, BUT I WENT THROUGH EVERY SINGLE PROPOSAL AND NONE OF IT REALLY MAKES SENSE WHEN YOU ARE TRYING TO BALANCE THE BOOKS. FRANCINE: > > IT MAY COME BACK TO BE AN ISSUE. WHEN WE FIND A MARKET CLEARING LEVEL FOR BONES, EVERYTHING ELSE, THEN WE ARE GOING TO START FOCUSING ON ACTUALLY BALANCING THE BOOKS. WE WILL GET BACK TO DIVERGENCE BETWEEN EUROPEAN BOND MARKETS WHEN WHATEVER IT TAKES CEASES. FRANCINE: KIT JUCKES STAYS WITH US. COMING UP, WE WILL HEAR FROM THE STATOIL CEO AS HIS COMPANY TURNS THE PAGE ON THE CRUDE CRISIS. WE WILL GET THE VIEW ON OIL PRICES. THIS IS BLOOMBERG. ♪ FRANCINE: THIS IS " BLOOMBERG SURVEILLANCE. " STATOIL IS TURNING THE PAGE ON THE OIL CRISIS. SLASHING COSTS THROUGH A TURNAROUND. THE COMPANY IS NOW READY TO RAISE INVESTMENTS IN NEW PROJECTS AND DELIVER HIGHER CASH DIVIDENDS TO ITS SHAREHOLDERS. SPEAKING TO A GUY JOHNSON AND MATT MILLER, THE STATOIL CEO DISCUSSED EARNINGS AND PLANS FOR THE FUTURE. ELDAR: A LOT OF UNCERTAINTY IN THE MARKETS. THERE IS A STRONG DEMAND. THAT WILL CONTINUE THIS YEAR AS WELL. WE WILL SEE MORE SUPPLY FROM THE U.S. THERE ' S MORE VOLUMES COMING IN. THERE ' S A LOT OF PROJECTS THAT WILL COME INTO PRODUCTION ON THE SUPPLY SIDE. OVERALL, I EXPECT THE PRICE WILL BE LOWER THAN 70. WE DO HAVE A SLIGHTLY STRONGER VIEW IN THE MEDIUM-TERM. THAT IS BASICALLY BASED ON THE FACT THAT WE STILL HAVEN ' T SEEN THE IMPACTS OF THE REALLY LOW INVESTMENT LEVELS. GUY: YOUR SENSE IS THAT YOU ' VE TURNED A CORNER NOW. IF YOU READ YOUR REPORT, IF YOU LOOK AT YOUR OUTLOOK, THE SINCE SEEMS TO BE THAT THE DIFFICULT PERIOD, WE CAN NOW CALL TIME ON THAT. ELDAR: I THINK THE DEEPEST PART OF THE DOWNTURN FOR NOW IS OVER. STILL FACING A LOT OF UNCERTAINTY. THIS IS A CYCLICAL INDUSTRY. THERE WILL BE THINGS COMING UP DOWN THE ROAD. WE ARE NOW BREAKEVEN, POSSIBLY BELOW, WELL BELOW ACTUALLY. THAT IS SOMETHING WE WILL HAVE TO TAKE VERY GOOD CARE OF AND CONTINUE TO IMPROVE. IF THE HEAT STARTS COMING BACK, COSTS MIGHT COME BACK. FOR US TO CONTINUE TO IMPROVE IS EXTREMELY IMPORTANT. MATT: YOU WERE ABLE TO KEEP COST DOWN LAST YEAR COMPARED TO EXPECTATIONS. THEY CAME OUT AND SAID CASH GENERATION WAS A TOUCH WEAKER THAN THEY EXPECTED. WHAT DO YOU ATTRIBUTE THAT TO? WE ' VE SEEN CASH GENERATION MISS INDUSTRY EXPECTATIONS. ELDAR: WE HAD A VERY STRONG CASH GENERATION. MORE THAN 3 BILLION ON THE YEAR AFTER CAPITAL EXPENDITURES AND DIVIDEND. WE FORECAST THAT WE WOULD -- WE SEE A STRONG PICTURE ON CASH GENERATION, BASICALLY BASED ON A HIGH-QUALITY PORTFOLIO. INVESTING IN A STRONG PORTFOLIO, THE PRODUCT ON AVERAGE HAS A BREAKEVEN BELOW, AND THAT GIVES US A STRONG RESILIENCE FOR THE VOLATILITY AHEAD OF US. FRANCINE: THAT WAS STATOIL CEO ELDAR SAETRE DISCUSSING ECONOMICS WITH GUY JOHNSON AND MATT MILLER. LET ' S -- WE HAVE SOME BREAKING NEWS ON GERMANY, NEGOTIATORS REACHING A COALITION AGREEMENT. I DON ' T KNOW WHETHER THIS IS THE FINAL AGREEMENT. IT IS NOT REALLY HAVING AN IMPACT ON THE FOREIGN-EXCHANGE MARKETS. WE ARE KEEPING A CLOSE EYE ON WHAT IS HAPPENING IN GERMANY. LET ' S GET BACK TO OIL. JOINING US, I ' M RITA SENT. THANK YOU FOR BEING ON TODAY. THIS IS THE DAY AFTER OIL WAS SWEPT IN THIS GLOBAL MARKET ROUTE. ARE WE BACK TO LOOKING AT FUNDAMENTALS, ARE WE BACK TO LOOKING AT U.S. STOCKPILES NOW? > > THANKS FOR HAVING ME. I DON ' T THINK THIS IS OVER YET. THERE ' S DEFINITELY A BIG MACRO MOMENTUM IN OIL RIGHT NOW. IN MANY RESPECTS, I THINK THE DOLLAR IS GOING TO BE THE KEY IN THE SHORT TERM. FUNDAMENTALLY, NOTHING HAS CHANGED. THAT IS REALLY A REFLECTION OF THE FUNDAMENTALS. THIS IS A SOFTER TIME FOR OIL DEMAND GIVEN ITS REFINERY MAINTENANCE. THE CORRECTION IN OIL HAS BEEN LESS THAN OTHER MARKETS. THAT DOES TELL YOU THAT WE ARE IN A STRONGER POSITION. FRANCINE: WHAT DOES IT TELL YOU ABOUT THE PRICE OF OIL? IT SEEMS LIKE FINALLY THE MARKET IS LISTENING TO OPEC AND WHAT THEY ' VE DONE. > > FOR SURE. WE ' VE BEEN SAYING THAT WE ' VE PROBABLY BEEN MORE BULLISH FOR A WHILE, PRECISELY BECAUSE THE OVERHANG WAS GETTING ERODED QUICKLY. OPEC HAS MAINTAINED ITS DISCIPLINE AND THAT HAS HELPED TO CLEAN UP THE MARKET. WE HAVE ENTERED THIS YEAR WITH VERY LIMITED, IF ANY, OVERHANG. WHILE RIGHT NOW THE PRESSURE IS ON THE DOWNSIDE, WE ACTUALLY DON ' T THINK THIS IS GOING TO LAST VERY LONG. PRICES WILL BE SUSCEPTIBLE TO UPSIDE SPIKES IF THERE ARE ANY GEOPOLITICAL OUTAGES BECAUSE WE DON ' T HAVE A BUFFER ANYMORE. FRANCINE: WHAT DOES IT MEAN FOR UNDERINVESTMENT IN THE OIL AND ENERGY SPACE? IS THERE A CONCERN THAT IT GOES BACK TO 110, 115? > > GREAT YOU ARE ASKING THIS QUESTION, BECAUSE WE ' VE ALWAYS HAD A SPIKY OIL PRICE FORECAST FOR 2019 BECAUSE OF THAT. THIS IS THE LAST YEAR WHEN THE LEGACY PROJECTS, ONLINE. FROM NEXT YEAR ONWARDS, WE HAVE THE NUMBER OF PROJECTS AND DECLINE RATES PICKING UP. THEY ARE NOW TALKING ABOUT THIS LACK OF INVESTMENT. I DO THINK THERE IS A POTENTIAL FOR SPIKE. SHALE IS GROWING. WE ' VE SEEN A HUGE AMOUNT OF SHALE PRODUCTION GROWTH. 1.5 MILLION BARRELS A DAY AND STILL WE ARE DRAWING STOCKS EVERYWHERE. DEMAND GROWTH IS VERY HIGH. I DON ' T THINK WE ARE GOING TO GO BACK TO $100 AND STAY THERE, BUT COULD WE SPIKE UP TO $90, ABSOLUTELY WEEKEND. FRANCINE: HOW MUCH CAN THIS AGREEMENT BETWEEN SAUDI AND RUSSIA LAST? > > GREAT QUESTION AGAIN. THAT IS WHERE THE FOCUS IS. DO THEY ROLL BACK THE DEAL? I THINK THE MARKETS SHOULD

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Oil Analyst Sen Says Fundamentally, Nothing Has Changed

Amrita Sen, chief oil analyst at Energy Aspects, discusses the outlook for oil amid the global market rout and the potential for a short price spike in 2019. She speaks with Bloomberg's Francine Lacqua on "Bloomberg Surveillance." (Source: Bloomberg)

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