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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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World’s No.1 Oil Trader Sees Crude Inventories Shrinking This Year

Vitol Group, the world’s largest independent oil trader, expects global oil inventories to continue drawing down for the rest of the year, unlike its rivals and many analysts who see a growing glut on the market.

The world’s stockpiles of oil have diminished by around 300 million barrels since peaking at 1.2 billion barrels early this summer, and are expected to decline by another 250 million-300 million barrels between September and December, Vitol’s chief executive Russell Hardy told Bloomberg in an interview published on Wednesday.

Refineries that have bought a lot of cheap oil in the past few months are expected to play a key role in drawing down global oil inventories, Hardy told Bloomberg.

Gasoline demand could falter in the winter, but diesel demand could offset it, while jet fuel consumption still “looks bad,” Vitol’s top executive said, but added that demand recovery is likely to be uneven in the coming months.

“Things may get a little more difficult before it gets better, but we do believe that we’ll get through it and things will steadily improve,” Hardy told Bloomberg.

Vitol looks more bullish on oil’s short-term prospects than another major commodity trader, Trafigura, which expects a "supply-heavy" market through the end of the year, with inventories building by the end of 2020 as demand recovery stalls. 

The market will get worse before it gets better, Ben Luckock, Co-Head of Oil Trading at Trafigura, said at a conference on Monday, as carried by Bloomberg. The oversupply on the market is reaching the point where chartering tankers for floating storage becomes profitable, according to Luckock.

A resurgence of coronavirus cases in many parts of the world over the next few months will be the main hurdle to global demand for gasoline and diesel recovering to pre-pandemic levels by the end of 2021, senior executives at oil firms and commodity traders said at the virtual Asia Pacific Petroleum Conference (APPEC) earlier this week.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on September 16 2020 said:
    Despite strong fundamentals in the global oil market, oil prices have been hovering between $40 and $46 a barrel. The reason is that oil prices have been tackling a huge glut in the market which is declining surely but slowly.

    If Vitol Group’s projections of accelerating decline in global oil inventories between September and December are confirmed, then this will be a real bullish factor which could push oil prices higher and faster than now.

    Another bullish factor is the China factor which has become truly the pivot of both the global economy and the global oil market. Not only has China been breaking all previous records with its roaring crude oil imports but it is also breaking new records with its purchases of fuel blending products, suggesting that its fuel demand recovery may be more impressive than expected.

    And yet another bullish factor is the steep decline in US oil production calculated by me at 6.5 million barrels a day (mbd) or 50% of total production so far this year.

    And while a resurging COVID-19 pandemic is casting dark clouds over both the global economy and the global oil demand, the prospect of anti-COVID-vaccines is getting closer by the day particularly with the Russian vaccine which will be used to inoculate the Russian people in October.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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