ConocoPhillips CEO pushes back against global oil supply glut fears

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ConocoPhillips (NYSE:COP [https://seekingalpha.com/symbol/COP]) CEO Ryan Lance pushed back [https://www.energyintel.com/00000199-e263-dc43-a7fd-f77bc9270000] against fears that global oversupply will inevitably hit global oil markets, telling the Energy Intelligence Forum in London on Tuesday that "the sentiment today that's in the market doesn't really match the physical market."

Despite supply glut fears that have been driven by OPEC+ production hikes, increased drilling in the U.S., and falling demand typical for the winter season, Lance insisted the market itself is not showing evidence of a glut, explaining there have not been any major supply hikes in floating inventories coming into the U.S. Gulf Coast, which typically happen during times of spare capacity.

Lance acknowledged the "turmoil" in the global macroeconomic picture, with tariffs, inflation and broader geopolitical uncertainties poised as headwinds to GDP growth - which remains strongly correlated to oil and gas demand - "so it's setting up this bearish kind of view of the world, but again, you look at... the physical market that's happening today, you don't see that playing itself out."

From ConocoPhillips' (NYSE:COP [https://seekingalpha.com/symbol/COP]) perspective, the company does not see "a big flood of supply" coming from OPEC+ accelerated unwinding of voluntary production cuts, Lance said, calling most of the quota additions "paper barrels" that were "already in the market."

The CEO also pointed to crude inventories at Cushing, Oklahoma, which are at their lowest levels in more than a decade, while U.S. Gulf Coast inventories are still holding at "normal" rates.

Lance noted that if the price of U.S. WTI crude oil stays at $60-$65/bbl, supply likely will plateau around 13 million-13.5 million bbl/day "for quite some time, because the resource is immense, the technology is improving, the efficiencies are improving... [and] people will figure out how to make some of that Tier 2 and Tier 3 acreage profitable even at a $60-$65 price."

ETFs: (USO [https://seekingalpha.com/symbol/USO]), (UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH])

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