Word oil prices will remain relatively weak and markets will have to get used to the situation.
“My view is people need to kind of settle in for a while,” ExxonMobil chief executive Rex Tillerson.
“There’s a lot of supply out there. And I don’t see a particularly healthy world economy.”
Tillerson’s comments came as the world’s largest listed energy company said it would cut capital spending by 12 percent this year even while increasing its oil production by 7 percent, the Financial Times reported Thursday.
Oil prices are crashing because demand growth in China and elsewhere has slowed while US supplies are “coming like a freight train”, Tillerson said.
He said those conditions could persist.
Oil prices are down about 50 percent since last summer, prompting expectations that US production, which has grown rapidly in recent years, will soon level off and perhaps go into decline if prices do not rebound quickly.
However, Tillerson said the precedent of the shale gas industry, where production has continued to grow even as prices slumped and the number of rigs drilling wells dropped sharply, shows US oil output will be more robust than assumed.
The same companies that cut costs and increased productivity in shale gas are often involved in shale or “tight” oil as well, he said.
Tillerson said Exxon plans to cut annual capital spending for this year to about US$34 billion per year and to a little less for 2016-17, down from an earlier projection of US$37 billion.
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