LONDON, Oct 20 (Reuters) – Vitol, the world's largest oil trader, believes the crude price will struggle to trade above $60 a barrel next year, as the effects of slowing global demand growth could be compounded by a return of Iranian and maybe even Libyan barrels.
The price of oil has halved over the last 12 months, mainly as a result of unprecedented levels of production from some major exporting countries, but also as demand from China and other commodity consumers, such as Brazil and Russia, slackened.
Ian Taylor, the chief executive of Vitol, said his company forecast global oil demand growth in 2016 to reach around 1.35 million barrels per day (bpd), slowing from this year's strong expected growth of 1.7 million bpd.
Cheap oil encouraged record refining runs, but even this has not been enough to absorb oversupply and, as such, the price has held below $50 a barrel for much of the second half of this year .
Taylor said he expected consumption in China to increase next year, but global demand growth would likely still fall short of the levels seen this year.
"Will we get 1.7 million barrels a day in 2016? No. I don't think so and that's one of my worries. If we did get 1.7 million bpd in 2016, then we could easily get to $60, but I don't think we will," Taylor told the Reuters annual Commodities Summit.
"Can I see a big run next year? No. If we are above $60 by the end of 2016 I will be a little bit surprised."
The International Energy Agency forecasts demand growth of 1.21 million bpd in 2016.
Taylor said he did not expect OPEC's meeting in early December to yield any change to the producer group's stance of retaining market share by pumping record amounts of oil. The policy has exacerbated a global glut of crude.
"I don't expect it, but I'm certainly not going to take any big bets, because it still could happen and all we need is 500 (500,000 bpd) less from Saudi to give the market a bit of a serious shock," he said.
Return Of Iran
One of the big questions for commodity traders is how quickly Iran can return to the global markets once international sanctions against it are lifted.
The consensus among industry players is for Iranian exports to rise by around 300,000-500,000 bpd by next spring.
"There will be a battle for market share, particularly in Asia and a little bit in the Mediterranean. It will be difficult to place that (Iranian) oil. I think it will depend very much how far U.S. production has gone down by then," Taylor said.
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