World’s biggest traders see oil at $65-$100 a barrel next year

Traders expect oil storage tanks worldwide to start emptying amid reduced global supplies caused by sanctions against Iran as well as other factors. (Shutterstock)
Updated 11 October 2018
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World’s biggest traders see oil at $65-$100 a barrel next year

  • Oil has rallied this year on expectations that the sanctions, coming into force on Nov. 4, will test the ability of OPEC and others to fill the supply gap
  • Brent crude last week reached $86.74 a barrel, the highest since 2014

LONDON: The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as US sanctions on Iran reduce crude exports from the Islamic republic.
Oil has rallied this year on expectations that the sanctions, coming into force on Nov. 4, will test the ability of OPEC and others to fill the supply gap as shipments from OPEC member Iran decline.
Brent crude last week reached $86.74 a barrel, the highest since 2014.
But in 2019, forecasters such as the International Energy Agency say emerging-market crises and trade disputes could dent global demand while rising non-OPEC production adds to supply.
Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.

 

Alex Beard, chief executive for oil and gas at commodity trading company Glencore, said at the same event that he forecast a mid-term oil price of $85-90, as a release of US strategic oil stocks looked remote and would have limited impact anyway.
“I think the sanctions will be very tough. Waivers will be extremely limited, if any, and I don’t see an end to it as the objective is regime change in 2019. I can’t see anything that will affect oil prices dramatically to the downside,” Beard said.
“The European payment mechanism doesn’t shield you if you use the US financial system ... you can pay but don’t expect to be on their Christmas card list.”
Beard added that US infrastructure limitations would limit US crude exports that could otherwise compensate and new refining capacity coming online in 2019 would add further tightness.
The traders said, however, they expected some demand destruction in emerging market economies to help cap oil prices.
The chief executive of Gunvor, Torbjorn Tornqvist, said he saw lower prices next year at $70-$75, citing a slowdown in demand growth and a well-supplied market.
“There will be some Iranian exports but the amount will depend on the price. If oil goes up to $100 a barrel then waivers, if it stays around $80 a barrel then no waivers,” Tornqvist said.
Vitol and BP presented the most bearish views. Vitol Chairman Ian Taylor forecast a price of $65 a barrel.
“We’ve knocked down our demand growth forecast this year and for next year ... I think the only issue is: Will the US pipeline in the Permian (oilfield) manage to deliver a huge increase in the second half of 2019?,” Taylor said.

FASTFACTS

Industry forecasters such as the International Energy Agency say emerging-market crises and trade disputes could dent global demand while rising non-OPEC production adds to supply.


UAE’s Network International shrugs off Brexit to list shares in London

Updated 17 min 49 sec ago
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UAE’s Network International shrugs off Brexit to list shares in London

  • The planned share sale comes at an uncertain time in the UK
  • The company, which operates hospitals in the Middle East, was said to be also considering listing in the US or Singapore

SEAN CRONIN DUBAI: Network International, the UAE payments processor, has committed to a London IPO next month in what would be the UK’s first big share sale of the year.
The company intends to have a free float of at least 25 percent and admission to the London Stock Exchange is expected to take place in April, Network International said in a regulatory filing on Thursday.
The planned share sale comes at an uncertain time in the UK where there is still no clarity around whether Britain will leave the EU or not at the end of the month.
VPS Healthcare, the Abu Dhabi-based hospital operator, is reconsidering plans to list in London due to uncertainty surrounding Brexit, Bloomberg reported on Thursday citing a person familiar with the matter.
The company, which operates hospitals in the Middle East, was said to be also considering listing in the US or Singapore.
Emirates NBD, Dubai’s biggest bank, owns 51 percent of Network International while Warburg Pincus and General Atlantic jointly own the rest.
The share sale will be a key test of investor demand for new listings in London after a subdued 2018 across most European markets.
“Volatility has continued in recent months, driven by the uncertainty around trade between the US and China, the wider geopolitical climate and the potential end of the current bull run,” said Peter Whelan, partner and UK IPO Lead at PwC in a recent report.
“We are seeing a healthy number of companies preparing for an IPO in 2019 despite the ongoing Brexit negotiations which have clearly impacted IPO activity on the London market.”
The payment processor reported earnings of $298 million last year according to its website, up from $262 million a year earlier. It does not disclose net income figures.
The company handles digital payments across the Middle East, which generate three quarters of its total earnings.
Last year it processed some $40 billion in payments for more than 65,000 merchants.
Its key markets in the region include the UAE and Jordan it says that Saudi Arabia offers “significant opportunities.” It also offers services in 40 African countries with Egypt, Nigeria and South Africa being its most important segments on the continent.