World’s largest crude trader sees ‘post-vaccine euphoria’ in oil prices

By Verity Ratcliffe on 2/7/2021
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(Bloomberg) --The world’s largest independent oil trader, Vitol SA, joined rival Gunvor Group Ltd. in expressing caution about the recent surge in crude prices.

“The market is getting ahead of itself in terms of a post-vaccine euphoria but also continued belief in the ability of OPEC to manage supply,” Mike Muller, head of Vitol’s Asian operations, said Sunday in an interview with Dubai-based consultant Gulf Intelligence.

Crude prices have soared since early November on optimism Covid-19 vaccines will restore energy demand and because of deep supply cuts by the Organization of Petroleum Exporting Countries and its partners such as Russia. Yet many major economies remain in strict lockdowns and some are struggling to source enough vaccine doses.

Brent crude futures gained more than 6% last week to $59.34 a barrel, while WTI climbed almost 9%. Each benchmark is now at its highest level in more than a year.

Gains beyond $60 a barrel are unlikely because that would prompt energy companies to ramp up production, Gunvor Chief Executive Officer Torbjorn Tornqvist said on Friday.

Vaccines have been rolled out faster than energy markets predicted and China’s oil demand has rebounded rapidly, Muller said. But a full recovery depends on consumption elsewhere picking up, he said.

“The onus is on the rest of the world to start with the demand catch-up because China can’t consume much faster than it’s already been doing,” he said. “It’s already outstripping its 2019 numbers and growing at a phenomenal pace beyond most people’s expectations.”

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