The heads of the world’s largest oil trading houses called an end to a near two-year price slump yesterday as Brent crude rose to its highest level of 2016.
Vitol, Trafigura, Mercuria, Gunvor, Glencore and Castleton, which sell enough oil to meet almost a fifth of global demand, were all but unanimous in telling a Financial Times conference in Lausanne that oil prices were unlikely to revisit the sub-$30 lows of January.
Brent crude, the international benchmark, climbed by nearly 4 per cent to a four-month high of almost $45 a barrel amid mounting expectation of a deal to freeze production at this weekend’s Opec summit.
Igor Sechin, the head of the Kremlin-backed oil company Rosneft, echoed the traders’ view, and argued that a price of at least $50 a barrel was needed to avert future supply shortages. “The oil price is growing. I think everyone is expecting the successful outcome of our work,” Mr Sechin told the FT conference, in an apparent reference to a possible deal. “We will need higher price levels than $45 or even $50 a barrel.”
The remarks came ahead of a weekend meeting in Qatar when Opec kingpin Saudi Arabia and other big oil producers, including Russia and Venezuela, will try to freeze output in a bid to hasten the end of an oil glut. This would be the first significant concerted action to stabilise prices since the oil price went into freefall in late 2014.
Mr Sechin did not directly address the Opec meeting but said that there were signs that the market was tightening already as US output contracted.