Lower Gas Prices here to Stay?

Posted on July 7, 2015

When BP makes an announcement that lower prices are here to stay, most people listen very closely. The world’s biggest of oil companies announced that they had a 2nd quarter replacement cost loss of $6 billion dollars. They warned the industry that these low oil prices are here to stay, and most in the industry are in agreement. CEO Bob Dudley said in a statement that external environment remains are challenging.

Just in the last few months, Bruce Levenson noticed the price of oil has fallen way back for a number of reasons. One, the continued oversupply of oil in the market combined with the weakness of that market. Now add into the mix the latest agreement made with Iran, and BP is confident that weaker prices are here to stay. By taking this position now, BP is preparing to serve themselves well in the near future.

The play for $40 oil barrels is completely unheard of if you look back just a few years. Oil barrels were pushing the $100 mark daily, and no one could have predicted the prices to drop so drastically in such a short amount of time. Oil prices continue to plummet this year, with crude oil hitting a new four month low this week. This route to the bottom is far from over for crude oil prices, as prices dropped from $62 to $54 per barrel. BP capital expenditures will come in at less than the $20 billion dollars for this year. Cash costs to date are $1.7 billion lower than at the same time last year.

Categories: National News

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