Vitol warns on current oil prices


Vitol are one of the world’s largest oil traders. Thus the blog was interested to see their CEO, Ian Taylor, suggesting that the recent rise in oil prices “does not sit comfortably with the currently available supply and demand data”. According to ICIS news, Taylor went on to note:

• Oil demand fell 3m bbl/day in Q1 versus 2008
• Inventories are well above 5-year highs
• A “huge surplus” exists in terms of days of supply
• OPEC cuts “are unlikely to rebalance the market any time this year”

Yet last night, oil moved above $71/bbl, confirming the blog’s own warning last month (when prices were at $60/bbl) that $80/bbl was possible by the summer. According to Taylor, financial player involvement is now back to last July’s levels, when crude peaked at $147/bbl.

Chemical companies should be on the alert for a sudden change in sentiment, once the current rally runs its course. As Taylor noted, “in the short term, supply and demand fundamentals seem to be almost irrelevant to the flat price of oil, but as was seen in the second half of last year, they will always assert themselves over time.”

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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One Response to Vitol warns on current oil prices

  1. Biofuelsimon 11 June, 2009 at 4:30 pm #

    I’ve been waiting to see oil prices fall for the past six months. That’s just not happened. When the paradigm shifts, I think that it is likely to be with a bit of a bump for the unprepared. I guess we could see domestic energy prices falling next winter.

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