Bearish Traders | Russell T. Rudy Energy LLC
“World Oil” reports that of 15 traders and executives interviewed, all but one see oil prices mired in the $40-$60 range for the next year. The global oversupply seems to be a continuing problem. As Arzu Azimov of Socar Trading observed, “The issue is that once prices go up too fast, American drillers start to produce more.”
The majority of the oil traders surveyed feel that any potential rebalancing of crude markets has been pushed back at least 6 months from the original projection of an early 2016 price recovery due to increased production from Iran, Saudi Arabia, and Russia and the continued resilience of U. S. shale output.
Until the global oil glut has been reduced, prices will remain depressed. Saad Rahim, with Trafigure Group Pte., feels that “The market has yet to start working through millions of barrels of inventories accumulated during the downturn.”
There seems to be a pervasive sense of skepticism among traders regarding a production freeze. This is partly attributable to doubts that it will ever happen, and even if it did, a freeze at record levels would do nothing to address the glut. Saudi Arabia is producing the most crude it ever has and Russia is pumping more than 11 million barrels of oil per day for the first time since at least 1991. Finally, as David Fyfe of Gunvor Group Ltd. opined, “There is a risk of crying wolf” if producing nations keep threatening a freeze that never materializes.
The good news is that most traders, as well as the International Energy Agency, see limited downside price risk as global demand is expected to increase. Eiong Tan, head of crude trading at BP offered, “In general, we believe we are getting closer to balance. Consumption is catching up with supply.”
In the meantime, the consensus seems to be that the supply overhang that developed over the last two years, will keep a lid on prices.
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/9/8/biggest-oil-traders-see-another-year-of-pain-as-glut-endures .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
