Royal Dutch Shell expects oil prices to recover gradually over the next five years, with progress slowed by persistent global oversupply and receding Chinese demand growth.
A rise in global supplies, mainly due to a sharp increase in output from U.S. shale, has weighed on oil prices.
In the nearer term, Shell expects Brent crude oil to show only a modest recovery from today’s $58 a barrel, with 2016 prices forecast to average $67 a barrel and $75 a barrel in 2017.
Oil companies rarely reveal the price forecasts that underpin their future strategies. The chief executive of Shell’s rival BP , Bob Dudley, said recently he expected oil prices to remain low for “a couple of years most certainly.”
The drop in prices boosted demand across the globe. In the United States, gasoline consumption has soared to multi-year highs in recent months as motorists drove more and sales of large vehicles surged.
According to John Abbott, Shell’s downstream director who oversees refining and trading, consumers have also leapt on the drop in oil prices to stock up tanks.
“In countries like Germany and the United States where people use heating oil, they use the low prices as an opportunity to fill up the storage tanks in their back garden. Some people watch pricing like a hawk. (In Germany) home consumer heating oil storage is at a five-year high today.”