“They’re moving into the digital age and the internet of things, which is starting to have a real impact on these businesses. A lot of people who have turned away from the sector will be surprised when they come back to it.”
Hulf says many investors will return to the sector soon enough, predicting that the second half of 2017 would see consistent upward momentum in oil prices.
As for worries that increased US shale production would keep global prices capped, undoing the efforts of OPEC members to curb production, he says “the numbers aren’t there.”
“Globally, we are producing and consuming roughly 96m barrels per day,” he said.
“Roughly 35m barrels per day is coming from OPEC members, the rest is non-OPEC. The three biggest producers – Russia, Saudi Arabia and the US – all produce close to 10m barrels per day. The US is just below 10m at the moment and shale makes up 6m barrels within that figure.
“Undoubtedly, there has been a sharp rise in production in the US but the numbers aren’t there. Ultimately, the US can’t rebalance the market.”
But not everyone is as bullish as Hulf on the sector’s triumphant recovery.
Although Hargreaves Lansdown equity analyst Nick Hyett expects Shell to publish a similarly upbeat first quarter update to its peers, he thinks it unlikely that oil prices will rise further this year.
In fact, he thinks prices have reached their “natural mid-point around the $50” range.
“It is difficult to see them shooting above $60 per barrel,” Hyett said.
