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The Brent Crude price is finely balanced at US$60 per barrel, but the U.S.-China trade spat will likely drag oil demand and, as a result, oil prices, lower rather than higher, Brian Gilvary, the chief financial officer of one of the world’s oil supermajors, BP, told Reuters on Tuesday.
“It really is finely balanced at around $60,” Gilvary told Reuters after BP reported a 41-percent slump in its third-quarter net profit due to lower upstream earnings on the back of low oil prices, maintenance, and weather-related shut-ins.
According to the BP executive, global oil demand growth in the third quarter slowed to just 900,000 bpd, down from 1.3 million bpd in Q1 and 1 million bpd in Q2. Going forward, uncertainties about demand will also weigh on oil prices in view of the U.S.-China trade war, Gilvary told Reuters.
For BP, the third quarter ended with an underlying replacement cost profit—BP’s closest metric to a net profit—of US$2.3 billion, down from US$3.8 billion a year earlier. The earnings were heavily influenced by maintenance, Hurricane Barry in the Gulf of Mexico, and lower oil prices.
Earlier this month, BP warned that Hurricane Barry, which passed through the U.S. Gulf of Mexico in mid-July, hurt the supermajor’s oil production in the third quarter, cutting it by around 100,000 barrels of oil equivalent per day.
Related: IEA: An Oil Glut Is Looming
Strong downstream performance helped BP’s earnings in Q3, but they were still 41 percent lower from a year ago, despite beating expectations of a US$1.8 billion profit.
“Today’s Q3 numbers weren’t expected to come in close to the levels seen in Q2, given the decline in oil prices seen since then. However, they still show a company that is nimbler and more efficient than it was a decade ago,” Michael Hewson at CMC Markets wrote in a comment on BP’s Q3 performance.
“Currently BP has breakeven prices of just below $50 a barrel, however, the jury remains out as to whether buying BHP Billiton’s shale assets for $10bn was a wise move in the current environment,” Hewson said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.