BHP very bullish oil

Oil market rebalancing, says BHP

A BHP Billiton oil rig.

• RHIANNON HOYLE
• Dow Jones
• 9:52AM February 28, 2017
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The oil market is rebalancing and demand for liquids — including crude oil, condensate, natural gas and biofuels — should begin to outpace supply later this year, helping to normalise global inventories, says BHP Billiton vice president of petroleum marketing Michiel Hovers.

Last year’s deal among oil-producing nations to cut output along with the Organization of the Petroleum Exporting Countries has accelerated that rebalancing, Mr Hovers said in remarks on BHP’s website.

BHP, the world’s No. 1 miner (BHP), wants to increase its exposure to world oil markets following a massive expansion of iron-ore mining operations in recent years. In October, the company outlined a plan to expand its oil-and-natural-gas business by advancing new projects that can be developed at a fraction of the cost than previously expected to take advantage of the projected recovery in global energy prices.

Mr Hovers said BHP expects “compelling market fundamentals” to emerge in the global oil market next decade.

“Demand growth and natural field decline suggest the world will need 30 million new barrels per day by 2025, which is equal to roughly one third of total global supply today,” he said.

BHP forecasts global demand for liquids will rise by roughly 1 per cent a year over the coming decade as populations swell, living standards increase and more people in the developing world become car owners. At the same time, it forecasts yields from producing fields to decline at an average rate of 3-4 per cent a year.


“In recent years, investment has been extraordinarily weak by historical standards,” said Mr Hovers. “This phase creates the clear potential for the world to again be short of oil — as it periodically was prior to the US shale revolution.”