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(Bloomberg) — Major commodity traders Trafigura Group and Gunvor Group Ltd. have painted a bleak picture on the outlook for the oil market, echoing concerns over Chinese demand and plentiful supply.
Brent crude is “probably going to go into the $60s some time relatively soon,” Ben Luckock, global head of oil at Trafigura, said at the Asia Pacific Petroleum Conference in Singapore on Monday. His downbeat outlook came as Morgan Stanley cut its price forecasts for the benchmark for the second time in a matter of weeks.
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However, Luckock cautioned about being too bearish on the market during a panel discussion at the APPEC conference. “It’s dangerous because there’s so many events out there that can ruin your day,” he said. “I wouldn’t put all your chips on the table being short.”
Oil has tumbled since early July — wiping out all of this year’s gains — on concerns about the demand outlook for China and the US, and ample supply from outside of the Organization of the Petroleum Exporting Countries. OPEC+ last week resorted to delaying a planned output increase from October, but is sticking with a longer-term objective to boost production into next year.
“Today, we are producing much more oil than we are consuming, and that balance is seen to worsen over the next years,” Torbjörn Törnqvist, chairman of Gunvor Group Ltd., said during a separate panel discussion.
However, Jeff Currie, chief strategy officer of Carlyle Group’s Energy Pathways and a veteran commodities analyst, was more upbeat about the outlook during the same session with Törnqvist. Currie acknowledged China’s economic woes, but pointed to interest-rate cuts from the Federal Reserve and a likely recovery in financial positioning as bullish drivers.
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