Major international oil traders Vitol, Trafigura, and Gunvor on Thursday said a second coronavirus wave would slow down oil demand recovery. They also saw oil prices increased to $50/barrel or higher only by October 2021. Brent crude futures lost 1.6% to $42.62/barrel on Thursday morning as reimposed coronavirus-related restrictions increased uncertainty over the outlook for economic growth and fuel consumption recovery.
Vitol CEO Russell Hardy said he expected oil prices to increase to $55/barrel in October next year. Meanwhile, Trafigura chief executive Jeremy Weir and Gunvor’s Torbjorn Tornqvist expected oil prices at $52/barrel and $50/barrel by that time, respectively. They said Chinese demand for oil and other commodities would remain robust, but demand in Europe and the US was probably past its peak.
Hardy expected demand recovery in Europe, the US, and the northern hemisphere to be slow at least until next year’s second quarter when a possible COVID-19 vaccine could be available. However, he noted that demand would likely rebound higher pre-pandemic levels in Asia by the end of 2020, except for jet fuel, which is expected to remain sluggish for most of 2021. Hardy also said the ongoing massive investment cuts in the upstream sector would probably result in a new oil price spike in 3-5 years.
