Feb. 6 (UPI) -- The balance between oil supply and demand is delicate and there's nothing to guarantee the price of oil will stay near current highs, Total's CEO said Tuesday.
The price for Brent crude oil has at least twice settled above the $70 per barrel mark so far this year, breaking through a ceiling not seen in years. A combination of geopolitical risk factors and strong compliance with an effort by the Organization of Petroleum Exporting Countries to balance an oversupplied market with production cuts helped support crude oil prices during the first few trading weeks of the year.
Following global stock markets, the price of oil has moved further away from the $70 threshold this week, with Brent trading closer to $67 per barrel early Tuesday.
Speaking to French newspaper Le Monde, Total Chairman and CEO Patrick Pouyanné said the market situation is still in a fluid state.
"The supply-demand balance is therefore delicate, which explains the cycles and volatility," he said. "It is not written that the barrel will stay at its $70 level, and we are working on downturn scenarios at $50 per barrel," he told Le Monde. "There are still many unknowns on the oil markets."
Total U.S. crude oil production late last year started rivaling that of Saudi Arabia and a decision by former President Barack Obama to end a 40-year ban on crude oil exports means more U.S. oil is on the global market, challenging the OPEC effort to balance the market.
That said, Pouyanné said demand was accelerating faster than it has over the last three years, meaning more barrels will be needed to satisfy growth. From its global portfolio, the CEO said production for Total could accelerate by as much as 5 percent per year through 2022.
Speaking ahead of the company's fourth quarter earnings report, expected Thursday, Pouyanné said net income for the French supermajor should be about 30 percent higher than the $8.3 billion posted in 2016.
"These good results are the result of three elements: discipline over expenditures, production growth and higher crude prices," he said.