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 importers.
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 US 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 macro headwinds."
IMO 2020
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.
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