Shares in BP rose today after the Organisation for the Petroleum Exporting Countries (Opec) insisted demand will continue to rise, while the aftermath of Saudi Arabia's so-called purge continued to push oil prices higher.
In its closely-watched World Oil Outlook, published today, Opec said it expects global demand for oil to rise from 95.4m barrels per day in 2016 to 102.3m barrels in 2022.
By 2040, that figure is likely to rise to 111.1m barrels per day. Although demand from countries in the Organisation for Economic Co-operation and Development (OECD) will fall by 8.9m barrels per day, consumption in developing economies will increase by almost 24m barrels per day.
Investors took the news as encouraging for BP, which has put its break-even point at $49 per barrel, pushing shares up 1.3 per cent to 527.8p.
Rivals were also pushed higher on the news, with Shell's A shares rising 0.74 per cent and its B shares rising 0.73 per cent. On the FTSE 250, Tullow Oil rose four per cent, while Petrofac climbed 1.4 per cent.
"This is definitely positive for BP," said Nicholas Hyett, an equity analyst at Hargreaves Lansdown. "It is effectively dropping straight through to profit."
However, Brent crude fell off its high in mid-afternoon trading, dipping 0.56 per cent to $63.92, while the US benchmark, West Texas Intermediate (WTI) crude, edged 0.4 per cent lower, to $57.11.
Both benchmarks surged to a fresh two-year high this morning after crown prince Mohammad bin Salman arrested dozens of princes, military leaders and ministers over the weekend, strengthening his power in Saudi Arabia. The crown prince is a supporter of Opec's production cut, which it has hinted it may extend.
Oil demand growth will begin to fall
Although the Opec forecasts spelled good news for traditional producers, Hyett warned they could spur shale oil producers into action, threatening the likes of BP and Shell.
"Historically the US shale producers have proven they can move very quickly to take advantage of oil price spikes," he said.
"That could exert some downward pressure. It will be interesting to see how quickly they move. Historically they have been very quick to mobilise."
Renewables will record the fastest growth, with demand set to grow by 6.8 per cent during the period between now and 2040, pushing up its share of the market by four percentage points, according to the Opec analysis.
However, Opec said demand for oil will continue to grow, albeit by 0.6 per cent over the same period. By 2040, 2020 fossil fuels will make up less than 80 per cent of the global energy mix, falling to 78 per cent by 2030 and 74 per cent by 2040.