Bloomberg) – Trafigura Group sees oil markets strengthening in the coming months, as most of the world comes from barriers and recent production losses in the US contribute to tighter supply prospects.
“We have a strong market heading into the summer,” said Ben Luckock, head of oil trading at the commodity giant, in a Bloomberg Television interview. “We are really very bullish most of the world when it comes to getting out of lockdown this summer. So this market has gained momentum in light of the events in Texas. ”
The market is likely to underestimate the effects of an unprecedented polar explosion that hit the central United States last week, Luckock said. About 40 million barrels of oil production in February, largely from the Permian Basin, will not be produced due to the freezing, while refined products are likely to meet a similar number in lost production, he said. Plus, about 5% of the wells that came offline may never come back, he said.
Although it is “impossible” at the moment to fully evaluate the effects of the recent polar explosion, figures for US crude and refined products are likely to show strong gains in the coming weeks, further helping solid oil markets, Luckock said.
Global benchmarks for Brent crude oil have increased by about 25% this year as a combination of vaccine breakthroughs and OPEC + supply edges triggered a rally to more than a year highs. Due to the recent gains in crude oil prices, the oil futures curve has also strengthened markedly where closer contracts are more expensive than later – a bullish structure called backwardation which Luckock says is likely “here to stay.”
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