UNITED STATES, WASHINGTON (OBSERVATORY) — Brent crude oil will continue to trade in the $ 50 range in October 2020, executives of the world’s largest independent oil and commodity trading companies said at the Oil & Money conference in London on Wednesday.
An unsettled trade dispute between the US and China, a slowdown in the global economy and growth in US oil production will hold back oil prices in a market that takes into account too little – or not at all – geopolitical risks, top managers Vitol, Trafigura and Gunvor say.
Vitol predicts a slight decline in oil prices, Trafigura also expects a bearish trend in the short term, while Gunvor predicts that prices may rise slightly, but before that fall. “If the trade war does not end, then we will maintain a slightly“ bearish ”approach,” said Russell Hardy, chief executive officer of Vitol, the largest independent oil trader in the world, at a plenary meeting of the London conference.
On Friday morning, oil prices rose $ 1-2 after the explosion of an Iranian tanker off the coast of Saudi Arabia. Futures on Brent on the ICE in London soared 2.4% to more than $ 60.4.
On Thursday, Brent was trading at $ 58 a barrel. Like many other analysts, the leaders of major oil traders believe that trade disputes and a slowdown in the global economy have the greatest impact on the oil market, despite increased geopolitical risks after an unprecedented attack on the oil infrastructure of Saudi Arabia, oilprice.com notes.
In August, Vitol revised downward its estimate of global oil demand growth and now predicts an increase of only 600-650 thousand barrels per day this year.
Hardy said in early September that Vitol expects oil prices to weaken in Q4, although prices are unlikely to be below $ 50 for a long period of time.
A month later, Hardy continues to believe that concerns about a slowing economy and oil demand are driving bearish sentiment in the market.
“The risk premium disappeared quite quickly after the attack on Saudi Arabia. Concerns about the future continue to dominate,” Hardy said at the Oil & Money conference. Head of Trafigura Jeremy Weir expects oil prices in the region of $ 50 in 12 months, which is slightly lower than now.
According to Torbjorn Tornqvist, Executive Director of Gunvor Group, OPEC will have to take some steps to restore market balance. “I suspect OPEC will need to curb the market,” he said.
“The supply is growing, and the market is signaling that there is more than enough oil.”
On the sidelines of the conference, Shell chief executive Ben van Beurden said he was “a little puzzled” by how calmly the market accepted the attacks in Saudi Arabia.
“The market has been anesthetized by trade wars and an excess of shale gas to such an extent that it no longer responds to geopolitical risks,” he told Bloomberg TV.
However, not all analysts adhere to a “bearish” position. So, S&P Global Platts expects that Brent crude oil will be traded at the level of $ 65-70 per barrel at the end of this year, and data on oil reserves in November and December will radically change the mood in the market.
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