Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

APPEC interview: Trafigura sees oil slump to $50/b unless OPEC cuts deeper

Agriculture | Grains | Energy | Coal | Thermal Coal | Oil | Crude Oil | Metals | Non-Ferrous | Steel | Raw Materials

Market Movers Asia, Sep 23-27: Markets assess supply risks after Saudi attacks; US-China talks back in focus

Oil

Platts Market Data – Oil

NGL | Oil | Crude Oil | LPG | Oil Risk | Petrochemicals

Platts University New York

Shipping

India to enforce IMO 2020 rule on both domestic, international shipping: ministry officials

APPEC interview: Trafigura sees oil slump to $50/b unless OPEC cuts deeper

Highlights

Does not expect oil surplus to shift in the next six months

Sees $70/b oil in medium term

Singapore — Oil prices are likely to head towards $50/b in the next six months in light of the global economic slowdown, unless OPEC makes larger production cuts, Ben Luckock, co-head of oil trading at commodities trading house Trafigura, told S&P Global Platts on the sidelines of the APPEC conference over September 9-11 in Singapore.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"We are worried about the underlying sort of macro-economic set of fundamentals. We see a number of bearish headwinds from the market, which exacerbated by a trade war does not seem to be coming to a conclusion anytime soon," Luckock said in an interview.

He added that trade uncertainty between the US and China is especially a concern when "an international commodity trader cannot assess how the trade war is going based on whether a phone call is made for a meeting set in a month's time," highlighting the unpredictability the Trump administration has brought to the market.

Trafigura's downbeat assessment of the oil market is a far cry from last year's APPEC when oil traders warned of the possibility of $100/b oil on the back of sanctions on Iran and healthy oil demand. Since then, demand growth has slowed with S&P Global Platts Analytics putting oil demand on "negative watch", while Iran's supply shortfall was offset first by waivers and then by record US production growth.

STRAIT OF HORMUZ

Indeed, even geopolitical tensions across the Middle East, with a number of incidents near the strategically important Strait of Hormuz in recent months failed to move the dial on oil prices, a point Luckock was keen to make.

"It shows you how problematic the market is right now and even that [incidents near the Strait of Hormuz] cannot help the market get ahead of itself," he noted, suggesting that the glut will be tough to shift. The Strait of Hormuz is the most important oil chokepoint with more than 20% of global petroleum liquids demand flowing through the narrow waterway.

Overwhelmingly bearish economic sentiment has sent oil prices spiraling lower. They are now 20% below their 2019 high seen in late April. OPEC's continued commitment to keep crude production limited, in conjunction with US economic sanctions on Iran and Venezuela had lifted front-month ICE Brent crude futures above the $75/b mark in April.

However, oil prices turned lower as Beijing's counter tariffs on US goods announced last month prompted energy and financial market participants to unwind their long paper positions on concerns over a wider slowdown in China as the trade row escalates and its detrimental impact on oil demand.

Brent futures fell below $56/b on August 7, the lowest level since January 7. The front-month futures contract was last quoted at $62.41/b at 0212 GMT Wednesday.

$70/B OIL AHEAD

Luckock does see the market turning upwards after six months, but whether OPEC, Russia and its allies have the patience and confidence in a recovery is open to question as it heads into a key monitoring committee meeting on Thursday.

The OPEC pact has agreed to cut 1.2 million b/d until the end of the first quarter of 2020, with Saudi Arabia trying its best to accelerate the market rebalancing by cutting close to 600,000 b/d more than its agreed quota according to Platts' OPEC monthly survey.

However, some OPEC members such as Iraq and Nigeria have been laggards in complying with their quotas.

"I think OPEC has been pretty good but...I think they need to do more than they are currently rather than less," Luckock said. Oil prices have been hovering just above the $60/b mark, but have ticked upwards on an improved US oil stock picture, which may encourage OPEC to stay on its current course.

The trader was upbeat for the early part of the next decade, predicting buyers and sellers in the industry will converge around a return to $70/b oil. "In the medium to longer term of two to five years the market should return to a price somewhere in the 70s/b, that kind of range. That's a good price for the oil industry as a whole looking forward."

-- Paul Hickin, paul.hickin@spglobal.com

-- Takeo Kumagai, takeo.kumagai@spglobal.com

-- Gawoon Philip Vahn, Philip.Vahn@spglobal.com

-- Edited by Norazlina Jumaat, norazlina.jumaat@spglobal.com

Platts Periodic Table of Oil

Know the difference between Oseberg and Cabinda. Our interactive table is your comprehensive guide to 120 of the most important crude grades traded on global markets.

Explore the interactive table