Global commodity traders Gunvor and Trafigura anticipate oil prices may range between $60 and $70 per barrel due to sluggish demand from China and persistent global oversupply, executives told a conference.
Oil prices have been under pressure due to concerns about waning demand in key economies China and the US — despite earlier expectations of summer demand being supportive — dipping after touching over $90 a barrel earlier this year.
Market relief came after OPEC and its allies, the group known as OPEC+, agreed last week to delay a planned oil output increase for October and November. However, commodity traders warn this relief may be short-lived.
“The market got a little bit of sugar candy for two months, but really very little,” Ben Luckock, global head of oil at Trafigura, told the Asia Pacific Petroleum Conference, adding that oil prices may fall “into the $60s sometime relatively soon.”
He added: “The market wants to know ... that OPEC is not going to bring those barrels back or at best is going to bring it back much slower and on a deferred basis.”
Oil’s fair value is $70 per barrel as there is more oil currently produced globally than consumed and the balance is set only to worsen over the next few years, said Torbjorn Tornqvist, co-founder and chairman of energy trader Gunvor.
“The problem is not in OPEC, because they’ve done a great job to manage this,” Tornqvist said. “But the problem is that they don’t control where the growth is right now outside OPEC, and that’s substantial.”
