Oil at US$100 a barrel is ‘thing of the past’, Petronas says in new report

Petroliam Nasional Berhad (Petronas) has forecast oil prices to hold in the $50s and $60s in its 2018-2020 Activity Outlook report.

In its report, Petronas said “oil at US$100 a barrel is a thing of the past”.

“In our view, the oil price outlook will hover around $50s to $60s per barrel,” the company added.

Sustained healthy global demand growth will help speed a drawdown in crude and fuel inventories, and hasten rebalancing in the oil markets, Petronas said.

“Currently, global oil demand is recorded at 98 million barrels per day and is expected to grow by 1.4 million barrels per day in 2018,” Petronas said in the report.

Nearly 60 percent of the growth will be contributed from the Asia Pacific region, mainly by China and India, it said.

Petronas last forecast that oil prices at $50 a barrel should be taken as the new norm, but it also said in its recent earnings announcement that it expects its overall year-end performance to be better than last year, indicating an improved view of the energy market.

Petronas’ oil output has been stagnant for years.

The company is increasingly focusing on downstream projects like its Refinery and Petrochemical Integrated Development (RAPID) project in the southern state of Johor, which from 2019 onwards will refine crude oil into fuel and petrochemical products.

Petronas, like other oil majors, has taken a hit from lower oil prices the past few years. Brent crude, though, has seen a recovery this year, trading above $63 a barrel on Monday and up nearly 12 percent for the year. [O/R]

Petronas continues to focus on cutting costs amid expectations that a low oil price environment will continue, announcing last year it would cut spending by up to 50 billion ringgit ($12 billion) over the next four years.