Oil prices won’t rise much further over the next year and a half as demand growth slows and refiners comfortably meet gasoline consumption, according to the world’s largest independent oil-trading house.
“I cannot see the market really roaring ahead,” Vitol Group of Cos. CEO Ian Taylor tells Bloomberg. “We have a lot of oil in the system and it will take us considerable time to work that off.”
Since rallying from a 12-year low of $27.10 a barrel in January, Brent crude has been hovering around $50 a barrel for the last month. The international benchmark will probably end the year “not too far away from where we are today” and rise to about $60 by the end of 2017, Taylor says.
The forecast, which coincides with a similar view from Goldman Sachs Group Inc., would mean oil-rich countries and the energy industry face a prolonged period of low prices, more akin to the 1986 to 1999 downturn than the swift recovery after the 2008 financial crisis. Vitol trades more than 6 million barrels a day of crude and refined products—enough to cover the needs of Germany, France, Italy and Spain together—and its views are closely followed in the energy market.
The price for brent crude hovered around $48 a barrel, while West Texas Intermediate, the U.S. benchmark, was trading for slightly under $47 a barrel as of about 9:40 a.m.
Taylor, who has traded oil for nearly four decades, says the summer driving in the U.S. may not be so bullish for oil because “the refinery system of the world has clearly been able to make enough gasoline, and the gasoline stocks are healthy.”
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