Trading firm Trafigura sees oil price rising to $70s/bl in 2020
By Julia Payne and Pratima Desai
GENEVA, March 25 (Reuters) - Global commodities trader
Trafigura Group sees Brent oil staying around current levels,
about $66-$67 a barrel, or slightly higher for the rest of the
year, and rising to the $70s in 2020, its co-head of oil trading
Ben Luckock said on Monday.
"We're gently bullish. We have a more stable and almost
sensible market. We traded between $50 and $87 a barrel last
year. $87 was probably too much ... The Iranian oil waivers
caught many people by surprise," Luckock told a briefing for
journalists at the company's Geneva headquarters.
"We're now trading $66-$67 a barrel, I think that's a
relatively sensible price."
After the United States re-imposed sanctions on Iranian oil
in November, Washington then issued waivers to a number of key
Luckock warned that several factors could still throw
predictions off balance such as whether Iranian waivers are
renewed and the stability of Libyan and Venezuelan output.
Washington recently imposed sanctions targeting Venezuela's
oil industry in an effort to force President Nicolas Maduro out
of office in favour of opposition leader Juan Guaido.
"Next year ... it (oil) will be trading with a 7 in front of
it," he added.
Trafigura's chief economist Saad Rahim said the Geneva-based
firm expected a tighter market in the second half of the year
but gains would be capped by weaker macro indices.
"We have U.S. production slower and flatter and ramping up
in the second half. We have a deficit in our balances even
before OPEC extends but I think we are rangebound given all the
Looking ahead to next year when a new, lower sulphur cap on
shipping fuels is due to take effect, Trafigura's Rahim expects
a deficit in diesel capacity of around 350,000 barrels per day
(bpd), which could be met by China.
The new rules imposed by the International Maritime
Organization mean that shippers cannot use fuel with a higher
sulphur content than 0.5 percent unless the vessel installs a
sulphur filter, known as a scrubber.
As a result, demand for high sulphur fuel oil, the main fuel
on ships, is expected to drop sharply in favour of diesel and
very low sulphur fuel oil, a new type of fuel that is starting
to be produced in various different blends.
"We think there is enough capacity to meet that extra
demand, particularly in China but that does require Chinese
refineries to respond to market signals," Rahim said.
China's refineries are constrained by refined product export
"On the fuel oil side, once you have accounted for increased
use in power generation you still need to dispose of 350,000 bpd
of fuel oil ... that has no home."
Trafigura has invested substantially in new ships with
scrubbers to meet these requirements.
"We took a significant position around freight ... We have
optionality on $1.7 billion of steel, which includes
predominantly crude and product tankers as well as gas
carriers," Rasmus Bach Nielsen, head of wet freight shipping,
Trafigura expects 25 out of the 35 new crude and product
tankers that it has leased to be delivered by end of the first
(Editing by David Evans)
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