At the Reuters Global Commodities Summit today, Vitol, the world’s largest oil trader, said it believes the crude price will struggle to trade above $60 a barrel next year, as the effects of slowing global demand growth could be compounded by a return of Iranian and maybe even Libyan barrels.
The price of oil has halved over the last 12 months, mainly as a result of unprecedented levels of production from some major exporting countries, but also as demand from China and other commodity consumers, such as Brazil and Russia, slackened.
Ian Taylor, the chief executive of Vitol, said his company forecast global oil demand growth in 2016 to reach around 1.35 million barrels per day (bpd), slowing from this year’s strong expected growth of 1.7 million bpd. Cheap oil encouraged record refining runs, but even this has not been enough to absorb oversupply and, as such, the price has held below $50 a barrel for much of the second half of this year. Taylor said he expected consumption in China to increase next year, but global demand growth would likely still fall short of the levels seen this year.
“Will we get 1.7 million barrels a day in 2016? No. I don’t think so and that’s one of my worries. If we did get 1.7 million bpd in 2016, then we could easily get to $60, but I don’t think we will,” Taylor told the Reuters annual Commodities Summit. “Can I see a big run next year? No. If we are above $60 by the end of 2016 I will be a little bit surprised.”
Source: Reuters Global Commodities Summit
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