LAUSANNE, Switzerland--Oil prices are unlikely to sink to fresh
lows this year, major commodities traders said Tuesday, though they
stopped short of predicting any significant rebound.
"The low price is now behind us," Torbjorn Tornqvist, CEO of
Gunvor Group, told the FT Global Commodities Summit in Lausanne,
noting that the current oversupply in the market isn't large and
oil prices may have overreacted to the downside.
Though predicting oil prices is notoriously difficult, with
hardly any in the industry forecasting the current slump, there are
signs that the market could get some support. For one thing, strong
oil demand in the first few months of the year is pointing to an
uptick in consumption.
Vitol, the world's largest oil trader, sees oil demand
increasing by 1.2 million barrels a day this year, almost double
its rate of growth last year. BP PLC's trading arm is expecting oil
demand to be at the top end of forecasts this year at around 1.4
million to 1.5 million barrels a day.
However, the traders aren't necessarily expecting that this will
translate into a significant rebound in price. In fact, large stock
builds currently taking place as a result of the supply glut could
keep pressure on prices for months after supply and demand return
to balance, BP's chief economist Spencer Dale said.
Mr. Dale said he expected the oil market to return to balance as
soon as the end of this year, as lower prices damp supply and
increase demand.
However, "that's not the problem solved, it just marks the point
at which the market stops getting worse," Mr. Dale said.
Write to Sarah Kent at sarah.kent@wsj.com
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