Exxon Warns Crude Could Hit $160 as Inventories Thin
Exxon senior vice president Neil Chapman warned on Thursday that exxon-linked crude prices could reach $150 to $160 a barrel within weeks as inventories get down to unusually low levels. For refiners, airlines, drivers, and fuel buyers, that points to a tighter market if stockpiles keep falling over the next two to three weeks.
Neil Chapman in New York
Chapman spoke at the Bernstein Conference in New York and said, “We're approaching unheard of inventory levels.” He added, “I mean really, really low levels. You can debate whether that's going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you'll see prices shoot up.”
Chapman also said, “will shoot up… up to $150, $160.” His warning centered on the market’s inventory base, not a single headline event. Commercial inventories of crude oil, liquids, petroleum, gasoline, diesel, and jet fuel have all run down, leaving less buffer if demand stays firm.
Inventories, Brent, and Western reserves
Chapman said the release of strategic petroleum reserves by various Western countries has helped cushion prices, but only temporarily. He said, “Commercial inventories of crude oil, of liquids, think petroleum, gasoline, diesel, jet fuel, they've all run down. And running down those inventories has mitigated or offset, supplemented by the release of strategic petroleum reserves, which most of the Western countries have done. All of that has mitigated the impact.”
He also said, “And I think crude being in this sort of $90 to $110 for the last whatever it is, six weeks, has really been mitigated by running down inventories. It can't last forever.” That range matters because it shows how much the market has already relied on stored barrels to keep prices from moving higher.
April $117 to May $103
Dated crude fell from a monthly average of $117 in April to near $103 in May, after hovering near $75 a barrel before the U.S. and Israel launched a bombing campaign on Iran in late February. The move leaves traders with a narrower cushion if inventories keep sliding, and Chapman’s estimate suggests the next leg could be sharp rather than gradual.
Exxon shareholders also approved a plan on Thursday to move the company’s legal home from New Jersey to Texas. For shareholders, the two votes in one day tied a crude-price warning to a corporate relocation that changes Exxon’s legal base while the commodity outlook turns more volatile.
