Vitol sees OPEC fail to meet global oil demand, prolonging crude rally

Through Anthony Di Paola to 7/4/2021

(Bloomberg) – The world’s largest independent oil trader expects the rally in crude to continue on the assumption that any increase in OPEC + production will fail to keep pace with growth in the request.

The Organization of the Petroleum Exporting Countries and its allies are deadlocked on a possible increase in production and an extension of their supply agreement until the end of next year. While the group broadly agrees to add 400,000 barrels per day each month for the remainder of the year, the UAE has not signed amid a dispute over its benchmark reduction. production.

“We have had dead ends like this before and they have been resolved,” said Mike Muller, Asia Manager of Vitol Group, during a daily webinar hosted by Dubai consultants Gulf Intelligence. “Whatever OPEC + agrees, it will surely be a fraction of the amount needed” to meet the growth in consumption.

Crude prices have climbed about 50% this year as economies emerge from the coronavirus crisis, reviving demand for fuel.

“The stage is set for prices to continue to climb,” Amir Khan, senior economist at Saudi National Bank, told Bloomberg Television on Sunday. “We are in an environment where the demand for oil is increasing. This uncertainty about the supply outlook will translate into higher prices. “

OPEC data shows that once inflated oil stocks have now returned to average levels. Inventories will continue to decline, according to Muller, who said U.S. oil producers, including shale drillers, were also not adding barrels quickly enough.

OPEC + ministers are due to meet again on Monday for a third day of talks after failing to reach a deal last week.

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Felix J. Dixon