The oil market rebounded from the bottom, and by the end of the year cost of raw materials will rise to $50/bbl. Such forecast was given today by the heads of leading oil trading companies in the course held in Lausanne, Switzerland industry conferences Commodities Global Summit, organized FT.
The heads of the leading trading companies Trafigura, Vitol, Gunvor, Mercuria, Castleton and trading division of Glencore almost unanimously stated that the oil market began to return to balance, and the demand for raw materials will begin to overtake supply in the second half of 2016.
“The bottom is behind us, — quotes Bloomberg words of the General Director of the Swiss oil trader Gunvor of Thorbjorn the tornkvist. Market definitely rebounded from it”. High volatility will remain, but prices will now move upwards–not as fast as some expect some, but still, added tornkvist.
The global rebalancing of supply and demand may occur towards the end of the third quarter amid declining production in financial difficulty manufacturers, results FT the words of the Director General of the Dutch oil trader Trafigura Jeremy Weir. According to him, this will reduce the surplus on the market. “The bottom is behind us. Unless you happen to any disaster,” stated a top Manager.
The balance in the market was improving, said the head of the world’s largest independent oil trader Vitol Group Ian Taylor. According to his forecast, the world’s leading manufacturers, most likely, will agree on the “freezing” of production at the next meeting in Doha next week.
When the prices recently dropped below $28, this had a positive impact on oil, as forward prices fell faster current. This provoked the cancellation of the leading oil producing projects, said Marco Dunand, shveycarskogo CEO of oil trader Mercuria Energy Group. “We are waiting for the market recovery and price increase to $50/bbl. by next year,” said Dunand.
“The price of oil increases. I think everyone is counting on the success of our common work, — said the head of “Rosneft” Igor Sechin. We need prices above $45/bbl. or even $45/bbl.”. Production of tight oil in the US are falling, despite preferential tax treatment, said Sechin.
The oil market is at the beginning of long-term trend to higher prices will rise to $60/bbl. later this year and to $80/bbl. in 2017, said Pierre Andurand, investment Director of London hedge Fund Andurand Capital Management.
Alex beard, head of oil trading business of Glencore Plc. was less optimistic about the recovery. He noted that over the past year and a half of oil storage was replenished with 300 million barrels. oil.
“Hopefully we’ll start to move towards balance, but I don’t think it will happen very quickly, said bird. — We still have to spend a large amount of reserves”.
Management of trading companies was unanimous in saying that production in Iran after removal of sanctions of the country in Navarre will grow slower than expected earlier.
To attract investments in Iran for resumption of production is still difficult, said the head of the world’s largest independent oil trader Vitol Group Ian Taylor. According to Weir from Trafigura, banks are still “worried” about financing deals for oil supplies from Iran because U.S. sanctions against the country are still valid.
The business of refining, which demonstrated the in 2015 the high performance companies such as Vitol and Gunvor, most likely, you will have less margin in 2016, Taylor said. “This year for the refining industry all will be more complicated,” says Tornquist.
The price of Brent oil has now reached a four-month high, rising 1.5%, to $43,58 per barrel. The benchmark grew from $37,27 last week amid expectations of an agreement on “freezing” of production.