As the oil industry’s top executives gathered in London for one of the most important events of the year, their view on crude prices was clear: They will struggle next year.
Vitol SA chief executive officer Russell Hardy told the Oil & Money conference on Wednesday that the ongoing US-China trade dispute was curbing the outlook for crude prices, which would be stuck in the US$50s a year from now.
The bosses of fellow commodity traders Trafigura Group Ltd and Gunvor Group Ltd agreed, at least in the short term.
“Without some resolution to the trade wars, then we’ll remain a little bearish,” Hardy said.
For months, the oil market has been focused on a worsening demand outlook and trade tensions between the world’s two biggest economies, with the bearish mood only briefly pierced by attacks on Saudi Arabia’s energy infrastructure.
Trafigura CEO Jeremy Weir said the trading house expects a slight recovery this quarter, with prices “maybe slightly lower from where we are now” in a year’s time.
“Particularly with the current trade environment and a strong US dollar, I would say there’s further downside in the short term,” Weir said.
Gunvor CEO Torbjorn Toernqvist said he also sees oil at current levels, of under US$60 a barrel, a year from now and that next year the market would “test OPEC’s resolve” on its commitment to coordinated output cuts.
The current production cuts deal, agreed by OPEC and its allies, is due to expire in March next year.
Analysts at the conference echoed the view of trading houses, saying they saw the oil market remaining amply supplied next year.
Goldman Sachs Group Inc commodities research head Jeffrey Currie sees Brent crude at US$60 over the next two years.
The market is pricing in plenty of supply and demand is a concern, Cornerstone Macro LLC global energy economist Jan Stuart said.
After a strong start to the year, Brent oil reversed direction in late April and has lost about 22 percent since then. The global benchmark was just below US$58 a barrel in early trading in Asia yesterday.
However, Royal Dutch Shell PLC boss Ben van Beurden said he was surprised prices were not higher than current levels, following the worst-ever attack on Saudi Arabia’s energy infrastructure last month.
“It’s a but puzzling in a way, but shows how good the response of Saudi Aramco has been,” van Beurden told Bloomberg TV. “The market is a little bit anesthetized by trade wars and the glut of shale to the point where it has become blase about geopolitical risk. I think it’s not representative of the real picture.”
Toernqvist agreed, adding that it seems that there is currently no risk premium on oil prices.
“It’s amazing that prices are at low-end of where they were before attack,” he said.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last