The direct impact from the effect of the Gulf spill is winding down for BP (NYSE:BP), and investors are increasingly looking at the fundamentals of the company as it deals with the tough oil price environment it's operating in.
CEO Bob Dudley recently stated concerning the price of oil that he sees it averaging about $50 per barrel in 2016, and for 2017, believes it'll average above that level, although he wasn't clear on how much above $50 he was thinking.
I think he's far too optimistic concerning his 2016 forecast, as I see it plunging to below $40 once again, and depending on actual demand levels for the remainder of 2016, along with the potential for inventory levels to climb further, it's possible the price of oil could struggle to be consistently in the $45 range on average.
As for 2017, the same will probably be true, for the same reasons. The major problem for 2017 is the pace of demand growth, as it's consistently falling below expectations for the rest of 2016, and 2017 as well. My thought is the global economy is going to continue to slow, with demand from the EU and Asia in general continuing to fall.
Combined with rising supply, it's difficult to see how this will play out any other way through the end of 2017, unless some geopolitical event disrupts oil supply.
As for BP and the strategy of the company, we'll look at four things in this article that will have an impact on the performance of the company, outside of the price of oil alone.