One of the world’s largest commodity traders, Trafigura Group, has warned that oil prices could rise sharply as higher interest rates and insufficient investment in the industry hurt the market. informed Bloomberg.
Most experts expect prices to stay near current levels, but the market is “more fragile than it looks,” said Ben Lacock, co-head of oil trading at Trafigura. “One of the reasons is insufficient investment in new oil production,” he said. “Combined with higher interest rates, which make it more expensive to store oil in storage, this means there isn’t much flexibility in the system. Put it all together and you have a market that is prone to price spikes.”
Brent oil prices have begun to recover and have already approached $90 per barrel against the backdrop of a reduction in oil supplies by OPEC + members. As of 16:27 Moscow time, November oil futures on the ICE exchange traded at $88.7 per barrel (+0.1%). Since the end of June, when OPEC+ members announced plans to cut production, futures for Brent crude have already risen by almost a quarter.
Last week, Russian Deputy Prime Minister Alexander Novak said that details of a further reduction in oil exports would be published by OPEC+ in the coming days. Traders expect Saudi Arabia to also extend voluntary production cuts into October.
Oil options traders are betting that oil prices will rise to $100 a barrel, even as questions remain about the prospects for a recovery in China’s fuel demand, the publication reported. China is one of the largest oil importers in the world.
Earlier, Vitol Group CEO Russell Hardy acknowledged that OPEC+ cuts were successful. In August, Russia reduced exports by 500,000 barrels per day; in September, the reduction was reduced to 300,000 barrels per day. Saudi Arabia cut oil production by an additional 1 million barrels for a month from July, and then extended this reduction into August and September.
В Trafigura Group notedthat OPEC+ group cuts have driven up oil prices and that Saudi Arabia has done an exceptional job of meeting its market targets. “OPEC+ will be guided by the price of oil,” said Ben Lacock. He does not rule out that the cuts could be extended until the end of the year.
According to Lacock, adverse weather conditions around the world, especially high temperatures, have had a significant impact on refineries and the reliability of their operation. “The extreme weather conditions that we have seen this year really make a big difference,” he said. The heat has created huge problems for refineries in Europe and the US, increasing downtime and problems that are hard to fix, he said.
Black Gold CEO Gary Ross believesthat oil at $100 is just around the corner. According to Ross, by the end of the year, Brent oil is likely to be traded in the range of $90 to $100 per barrel. The increase in demand for oil will also lead to an increase in the consumption of jet fuel and gasoline in China, the expert believes.
Analysts interviewees Reuters raised its 2023 oil price forecasts for the first time in four months. OPEC+ production cuts are expected to help curb supply, offsetting risks to demand from a slowdown in China’s economic recovery, a Reuters poll showed. Experts predict that Brent oil will average $82.45 per barrel in 2023, compared to the July consensus of $81.95 per barrel.
2023-09-04 13:41:37
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