Can Oil Stay Above $70? Eni's Chief Doesn't Think So

(Bloomberg) -- Can oil prices be sustained above $70 a barrel? Eni SpA chief Claudio Descalzi thinks not.

“The fundamentals are leading now,” Descalzi said in an interview in London. While stockpiles will shrink further, demand will be steady, and $70 crude will only last for the next “couple of months,” he said, forecasting an average of $60 to $65 this year.

Any deviation from this will probably be down to geopolitics, the CEO said, citing Nigeria, Libya and Venezuela as current areas of concern. With stockpiles lower, “we have less cushion to react to any geopolitical big issues,” he said.

Oil is hovering near the highest level in three years as the Organization of Petroleum Exporting Countries and its partners curtail output. Nevertheless, crude’s recent surge is making production in the U.S. more profitable, which may embolden shale drillers to ramp up supply.

Growth in U.S. shale could average about 1 million barrels a day this year but will be “counterbalanced” by OPEC’s cuts, according to Descalzi.

To contact the reporter on this story: Chiara Albanese in Rome at calbanese10@bloomberg.net.

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net, Amanda Jordan, Rakteem Katakey

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