Demand from energy sector companies for more enhanced data analytics will offset a decline in General Electric’s (GE) oil and gas business from the dramatic fall in oil prices.
The company has warned that revenue and profit could fall 5 per cent at its oil and gas unit this year, as customers slash capital expenditure budgets.
On Monday it said it plans to lay off 330 employees at its oil pump manufacturer Lufkin Industries, in Texas.
Brent crude prices are down 51 per cent since June and the slump has sparked writedowns across the industry.
GE said that its focus on innovation in data analytics offered an optimistic outlook in a challenging environment.
“What happens to the oil price is of course important within our company but we are able to respond with innovation,” said Beth Comstock, GE’s chief marketing officer. “Data analytics is very important when oil companies can’t invest new capital, they need to make as much from the existing operations, so its an efficiency play.”
Brent for March settlement climbed as much as $2.48, or 4.5 per cent, to $57.23 a barrel on the London-based ICE Futures Europe exchange yesterday. That is 23 per cent higher than its January 13 close of $46.59, the lowest in almost six years. A gain of 20 per cent in closing prices is commonly referred to as a bull market.
“The momentum clearly points to the upside. Many people have jumped on the bandwagon,” Carsten Fritsch, an analyst at Commerzbank in Frankfurt told Bloomberg News. “Sentiment has made a U-turn and the supply situation is being reassessed.”
Opec, which supplies about 40 per cent of the world’s oil, pumped 30.91 million barrels a day in January, according to a Bloomberg survey. That exceeded its target of 30 million for an eighth straight month as Iraq and Saudi Arabia boosted output while Libyan production fell.
Libyan crude exports declined 38 per cent to 245,000 barrels per day in January, according to ship-tracking data compiled by Bloomberg.
ascott@thenational.ae
* With Agencies