Most of the world’s top oil trading houses expect oil prices to decline next year as slowing global economic growth and rising oil supply is expected to compensate for fewer Iranian crude barrels on the market, executives at the largest oil traders said at the Reuters Global Commodities Summit on Friday.
According to Vitol’s chief executive Russell Hardy, oil markets are not that tight right now and a fair price of oil going into 2019 “is probably closer to the $70 or $65 per barrel mark than the $85-$90 area that some people are talking about.”
Nearly a month ago, at the Oil & Money conference in London in early October, the top executives of Vitol, Trafigura, Gunvor, and Glencore predicted the price of oil next year at between $65 and $100 a barrel due to a combination of many other factors apart from the U.S. sanctions on Iran.
While Vitol Group chairman Ian Taylor was the most bearish among the top oil traders, seeing Brent Crude at $65 a barrel next year, Trafigura’s chief executive Jeremy Weir was the most bullish and said he wouldn’t be surprised to see oil hitting $100 per barrel by the end of next year.
Vitol has now revised down its oil demand growth forecast for next year to 1.3 million bpd from 1.5 million bpd expected earlier, Hardy said on Friday.
Gunvor’s chief executive Torbjörn Törnqvist thinks that oil prices will stay at current levels of around $75 a barrel Brent next year because producers are aware of the fact that higher prices would dent demand growth, which could lead to another glut.
Mercuria’s chief executive Marco Dunand, for his part, believes that because of the trade tensions and other factors, demand may not be as strong next year as initially expected.
“The chances are that we are going to be building oil inventories,” Dunand said at the Reuters Global Commodities Summit on Thursday.
If Brent Crude prices hold to $70 into 2019, OPEC and allies could start questioning whether they hadn’t overreacted with adding supply, and may reverse their strategy to cutting production again, Dunand said.