(Bloomberg) -- Top executives at the world’s largest oil-trading houses said the worst of the crude market’s woes are probably over, with some predicting prices will climb to $50 a barrel by next year.
“The down market is behind us,” Torbjorn Tornqvist, chief executive officer of Gunvor Group Ltd., said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the end of that for sure.”
Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. The world’s largest oil traders were meeting in Switzerland before members of OPEC and other major producers assemble in Doha on April 17 to discuss an output freeze. Oil traders benefited a surge in volatility last year and that should continue, according to Tornqvist.
“We are going to have lots of volatility going forward,” Tornqvist said. “From here on the trend is up.”
A “rebalancing” of global crude oil supply and demand could be in place by the end of the third quarter of this year as production cuts by cash-strapped producers catch up with the current market glut, according to Trafigura Group Pte CEO Jeremy Weir.
“I believe we’ve seen the bottom unless there is some sort of catastrophic situation political or otherwise,” Weir said.
When oil prices recently scraped lows below $28 it was a positive for crude as forward prices fell faster than current ones, prompting major production projects to be canceled, according to Marco Dunand, CEO of Mercuria Energy Group Ltd.
“We anticipate the market to start recovery and we see a $50 price next year,” he said.
Brent climbed 1.3 percent to $43.40 a barrel as of 1:34 p.m. in London.
Alex Beard, head of oil at Glencore Plc, was less bullish about the recovery, noting that the global market had added over 300 million barrels of crude and product storage in the last 18 months.
“We hopefully will move into a rebalancing, but I don’t think it will come particularly quick,” he said. “We still have very large stockpiles to eat through.”
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