Brazil’s state-run energy producer Petrobras is increasing production and expects domestic demand for oil products to grow 5% this year, said Chief Executive Jose Sergio Gabrielli in an interview on the sidelines of the World Economic Forum’s annual meeting.
But Gabrielli also said the jump in global oil prices can’t be explained by market fundamentals and demand alone.
“If you look at the fundamentals of the market right now, demand is the same size as the demand was in 2007. We don’t see why the price is going up [on] the fundamental side,” he said, noting production and production capacity are sufficient.
Gabrielli also said the use of oil as a financial commodity is a much bigger driver of prices at the moment.
Petrobras makes internal plans based on assumptions of oil prices between $65-$85 a barrel, he said, noting it doesn’t make specific projections due to potential volatility in the market.
He expects demand for oil products in Brazil will grow in line with the economy in 2011, and said Petrobras expects to increase oil production by an average 7% a year over the next four years.
The state-run energy producer recently priced the sale of $6 billion in bonds at various maturities. Gabrielli said Petrobras doesn’t expect to tap bond markets again soon.
