Spare capacity to weigh on oil for years: BP economist

DUBAI (Reuters) – Spare capacity in oil markets could weigh on the price for years to come, the chief economist at oil major BP (BP.L) said on Monday.

Lower inventories later this year would support the oil price, but the supply cushion would prevent a sharp rally even if the world economy returns to growth, BP’s Christof Ruhl told Reuters in an interview.

“Would that mean prices will shoot up again? I don’t think so,” Ruhl said ahead of an energy conference in Dubai.

“Even if we went back to the demand growth rates of the past few years, it would take 3 years to get back to a market that was as tight as last year. And global growth is unlikely to return to the stellar levels of the last few years.”

By the end of the year, spare capacity would reach 6 million barrels per day (bpd), Ruhl said, up from around 2.3 million bpd about a year ago.

Reuters