CAIRO (Reuters) - BP’s Chief Executive Bob Dudley said on Tuesday that U.S. shale oil production would likely check future spikes in oil prices and the company saw $55-$60 as a healthy price for crude.
“Having a price that moves to $55 or around $60 feels like the right one to help industry avoid dislocations in producing countries... a healthy price for the world feels like 55-60,” Dudley told an oil conference in Cairo.
“The big question mark is shale: what happens to the U.S. shale production as oil prices go up, and that will keep a check on a spike in prices.”
The Organization of the Petroleum Exporting Countries and other exporters including Russia have agreed to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, aiming to rein in a global fuel supply overhang.
But undermining these efforts has been rising production in the United States, where increased drilling activity especially by shale oil producers has lifted overall output to 8.98 million bpd.
Oil rose on Tuesday, with benchmark Brent crude up 80 cents to $56.39 a barrel at 1425 GMT, supported by the OPEC-led output cut while rising production elsewhere kept prices within the narrow ranges that have contained them so far this year. U.S. light crude was up 70 cents at $53.63.
Claudio Descalzi, chief executive of ENI, told the conference that the Italian oil company was comfortable with prices.
“ENI can cover its capital expenditures at $50,” he said.
BP warned that while consuming countries prefer lower oil product prices these were not necessarily good for global balances.
“Everyone likes low product prices and it feels good in those (consuming) countries but this is actually really difficult on many producing parts of the world,” Dudley said. “It creates world instability to have low prices.”
Reporting by Lin Noueihed and Eric Knecht; Editing by Louise Ireland/Ruth Pitchford