World's Top Oil Trader Vitol Sees Price Stuck at $40-$60 to 2016

03-Sep-2015

Oil prices will remain at $40 to $60 a barrel into 2016 as rising crude supplies overwhelm demand, according to the world’s largest independent oil trader.

The oil-production surplus means stockpiles will keep expanding for “the next few quarters” and excess inventories won’t clear until 2017 at the earliest, Vitol Group BV Chief Executive Officer Ian Taylor said in an interview.

The forecast, if realized, would mean oil-producing countries and the energy industry would need to weather a longer downturn than occurred after the financial crisis of 2008-2009, when prices fell as low as $36 a barrel, but recovered to almost $80 within a year. Vitol handles more than five million barrels a day of crude and refined products -- enough to cover the needs of Germany, France and Spain together.

“Oil prices will be stuck between $40 and $60 a barrel this year and in 2016,” Taylor said. “I don’t see much reason to go higher and we can go lower” because the physical crude oil market is “quite weak” right now. (by Javier Blas and Will Kennedy, Bloomberg Business)