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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for US-based Divergente LLC consulting firm, and a member of the Creative Professionals Networking Group.

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The World's Top Crude Trader Sees Brent Crashing To $45

Oil

The world’s largest oil trader sees the price of the Brent barrel falling almost $14 to $45 in 2018, from its current price of $58.01, according to Ian Taylor, CEO of Vitol Group.

Taylor is predicting a surge in oil production from US drillers—an event that would likely drag oil prices downward in 2018 to $45 per barrel.

Despite the general optimism in the industry regarding oil prices, Taylor sees this optimism as false hope.

“I think there’s a chance oil could fall closer to $40 than $50, because I think there’s still one more big surge coming from U.S., which will knock prices down.”

Vitol’s CEO just last week offered up his opinion that US oil production will continue to increase in 2018—its final production spike before prices dip too far and production slumps once again.

US oil production has steadily increased throughout 2017. Production in the first week of January averaged 8.946 million bpd of crude oil, but has since climbed to an average of 9.480 million bpd as of October 6, according to the EIA. The EIA is expecting US oil production to reach 9.8 million bpd in Q1 2018, according to the latest Short Term Energy Outlook, with an average of 9.92 million bpd for the whole year.

French Total SA agrees that a surge in US oil production is on the horizon due to the increased hedging that shale producers are undertaking. 

We will see another wave of investment in US shale, no doubt about it,” Patrick Pouyanne, chief executive of Total, said at the Oil & Money conference in London on Wednesday, as reported by the New York Times. US drillers are now hedging between $52 and $56 per barrel, which could incentivize drillers to keep drilling even if the price falls.

Related: World’s No.1 Oil Trader: U.S. To See Final Oil Output Spike In 2018

This production spike from US drillers could press downward crude oil prices to levels not seen since 2015.

US shale producers have hedged a third of 2018’s oil production at roughly $52 per barrel, according to investment bank Tudor, Pickering, Holt & Co (TPH).

“There is definitely going to be a pretty large surge in production next year,” according to TPH’s Jamaal Dardar. TPH is predicting US oil production will reach 10.2 million bpd in 2018, compared to 9.92 million bpd that the EIA is predicting.

By Julianne Geiger for Oilprice.com

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  • JustMeNS on October 18 2017 said:
    Key word here is trader. Are they taking their book?
    Inventories are going down. Investors are putting pressure on Shale producers to be prudent. Oil is going up despite those that try to keep it down.
    Patience.
  • Neil Dusseault on October 18 2017 said:
    The U.S. oil industry seems to be as of late 'allowing' the price of oil to continue upward for now, as the weekly Baker Hughes oil rig count reports a decline if not plateau (perhaps due to various recent storms). But from the Permian to Eagle Ford to Bakken there seems to be plenty of production but simply not enough to keep up with demand, as yes, it appears as though OPEC's and NOPEC's (Russia) plan to dwindle down supplies in U.S. storage tanks (according to the weekly EIA reports) is working...but yet they are still not happy: Too many people keep calling for a minimum $60 WTI and at least $65 Brent. What will this due to the weekly oil rig count report? What about the weekly EIA reports? Will the glut move towards its 5-year average? Will OPEC finally stop jawboning with 'talks' of meeting in the future to discuss production cut extensions--all so that Saudi Arabia has the capital for their 5% sale of Aramco IPO next year for Vision 2030 when in just 12 years they will magically diversify away from oil completely, but in the meantime are one of the largest importers of arms...I mean what could possibly go wrong from the "Kingdom" that sent us 15 hijackers from 9/11 (not including Osama himself) and when Congress passed legislation last year allowing families of victims of 9/11 to sue KSA they threatened to pull $700 billion from U.S. investments to show us who is boss, like they own the U.S. Whatever. Let's go to $60 - $65 to finally appease some bulls; but don't forget--the very moment WTI crossed $50/bbl last year there were numerous analysts calling for $70, $80, and even $90 oil like some sort of drug addict, while Venezuela is in ruins claiming that they need at least $100 to $110 on WTI, let alone even higher for Brent. All of these OPEC countries have had decades to diversify away from oil, but alas...the greatest transfer of wealth in human history was squandered.
  • Jonathan Pulliam on October 19 2017 said:
    WTI crude will continue range-bound around US$ 47.00 per barrel for the near term. And it's worse than that as crude is dollar-denominated and we have a falling dollar.

    U.S. equities markets rode a wave of cheap fed funds and massive infusions of quantitative easing.

    But they needed to cook IBM's books so you don't smell the pure BS.

    The announced schedule of US Strategic Petroleum Reserve sales mitigate against higher crude prices, no?

    Lower U.S. auto sales ex-Toyota so far in 2017 mitigate against higher crude prices, no?

    Record U.S. lay-offs and manufacturing job out-sourcing will help crude prices how?

    Iraq, run by a corrupt al-Haidar Shia government which is basically a puppet of Iran, is set to steal the Kurds' oil fields.

    U.S. based oil production is excessively hedged at US$ 50.00 per barrel. It ain't goin' anywhere anytime soon.

    Now you have the head of the Vanguard Funds saying that U.S. stock market is overdue for a re-tracement of some significance.

    You have a U.S. President who has failed to deliver on past assurance to markets:

    "We're going to repeal and replace Obamacare", "We're going to cut corporate taxes", "We're cutting U.S. regulatory burden and promoting tax simplification and trade reciprocity".

    Instead of a record of accomplishment, our President is mired in a plot of U.S. and globalists, unrepentant Zionists, and "deep-staters" to have him removed on account of incapacity as stipulated in the U.S. Constitution's 25th amendment.

    Trump has basically cheapened the U.S. brand and sold off it's power to the highest bidder, ie the House of Saud.
  • Clyde Boyd on October 20 2017 said:
    I believe this guy actually has it right. As costs edge up more frackers will start flooding the market. Also, the supply glut will once again grow, and prices will decline. Most of the increases the last 4 weeks have been speculator wishful thinking rather than actual fundamentals.
  • Alexander Brewsky on October 24 2017 said:
    This must be that guy that is shorting the 3x ETF oil bull stocks at 10:15AM to 11:30AM EST. Looks like he's caught in a long term short and is getting burned big time. Nice...

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