Oil prices may be heading…
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Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world's largest commodity trading groups say.
There is a chance for $100 oil, Jeremy Weir, chief executive officer at commodity trader Trafigura, told the FT Commodities Global Summit on Tuesday.
"You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business," Weir told the online debate.
The largest commodity traders are bullish on oil in the near term, too.
Brent Crude traded at over $73.50 a barrel early on Tuesday, but the top executives of the trading houses see further upsides.
"Higher from here" for the next six months, Glencore's Head of Oil Marketing, Alex Sanna, told the same event today. According to Sanna, better news about vaccination programs, inflation bringing in investor cash, and the demand recovery will all contribute to rising oil prices.
Related: China’s Oil Imports To Drop After Refinery Margins Near $0
Russell Hardy, the chief executive officer of the world's biggest independent oil trader Vitol, also said that $100 per barrel oil is "of course a possibility," but warned the overenthusiastic bulls that "we're in a slightly artificial market at the moment," as the OPEC+ group still has around 5.5 million barrels per day (bpd) to bring back to the market, by April 2022 per current plans.
According to Hardy, diesel demand globally is now back to pre-pandemic levels, gasoline demand will return to pre-crisis levels in the fourth quarter, petrochemical demand is already ahead of 2019 levels, while jet fuel consumption is still a long way behind, as summed up by Financial Times Energy Editor David Sheppard.
Global oil demand will not peak until "around 2030," while a faster decline is to be expected only after 2040, Hardy told the FT summit.
Despite the decisively bullish oil price forecasts, Vitol's CEO doesn't see a new supercycle in oil. "It's a more contained situation than 2008," he said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.