Trafigura Group has joined other leading energy trading houses in saying oil demand is growing “strongly” this year, suggesting that Opec’s cheap oil strategy is spurring consumption despite weak economic growth in China and other emerging nations.
Oil ministers attending last week’s Opec meeting also expressed optimism about the outlook for global oil demand.
“From the beginning of the year until now, the market has been correcting itself upward,” the UAE Oil Minister Suhail Al Mazrouei said in Vienna.
“Strong consumption growth”, led by petrol demand in the United States and China, Trafigura said in its interim report on Tuesday. The Singapore-based company said it is now trading more that 4 million barrels day of crude and refined products for the first time, up 46 per cent year-on-year.
“The much-anticipated rebalancing of supply and demand now seems within reach,” said the Trafigura chief executive Jeremy Weir said.
As oil’s rallied more than 80 per cent since January to US$50 a barrel, most analysts have focused on supply, especially declining US oil production and unplanned stoppages in Canada and Nigeria, but a growing number of traders and producers are pointing to buoyant demand. The boss of Royal Dutch Shell said on Tuesday oil demand was set to grow 1.5 million barrels a day in 2016, higher than the 1.2 million forecast by the International Energy Agency.
The increase in consumption has largely been driven by petrol as lower fuel prices spur people to buy news cars – often larger, less efficient models – and drive them further. US petrol demand will average 9.3 million barrels a day this year, surpassing the peak set in 2007, the US Energy Information Agency said in its most recent monthly report.
Marco Dunand, the chief executive and found of the Geneva-based Mercuria Energy, one of Trafigura’s competitors, said last month that oil demand could grow by 1.5 million barrels a day to 1.8 million barrels a day in 2016.
“The rebalancing is happening a bit faster than anticipated because of the disruptions,” Mr Dunand said. “Demand is also stronger than expected” in countries from India to the US, he said.
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