(Reuters) – ConocoPhillips <COP.N> Chief Executive Officer Ryan Lance on Wednesday expressed surprise at the quick rebound in U.S. oil prices that slipped into the negative territory in April and said he expects prices to remain volatile in the near term.
Oil is now trading at near $40 per barrel, almost double of $20 it averaged in April, the same month prices had briefly slumped to minus $38 per barrel due to low demand as countries halted travel to curb the spread of the new coronavirus, while top producers agreed to pump full bore.
“We were surprised it came back this strong this quickly,” Lance said on a webinar hosted by the Independent Petroleum Association of America.
Lance added that a continued rise in crude storage could, however, drag down the prices as more producers reverse some production cuts announced in over the last couple of months.
U.S. shale oil producers have begun to reverse production cuts as prices bounce back, while crude inventories have risen 5.7 million barrels in the week to June 5 to 538.1 million barrels, the highest in history, as per latest EIA data.
Some consolidation in the sector will be a positive for the overall industry, Lance said, adding his company was monitoring the developments in deal activity closely.
“We’re in the market every day. Asset deals, smaller deals, and we’ll see if some of the corporate corporate transactions take hold, which should.”
ConocoPhillips, the world’s largest independent oil and gas producer, announced the biggest cuts by any North American producer in April, reducing its output by 460,000 barrels per day by June.
Lance, who has been at the helm of ConocoPhillips for eight years, did not say if the company was reversing any of the cuts.
(This story corrects spelling of ConocoPhillips in the headline)
(Reporting by Taru Jain; Editing by Shinjini Ganguli)