Oil Markets Are Relaxed About World Events, says trading giant Trafigura

The oil market has remained relaxed about security threats to supplies from the Middle East because output elsewhere has been ample, Trafigura’s oil trading head Ben Luckock said on “Bloomberg Markets.” He expects crude prices to remain range-bound.

Ben Luckock, Trafigura’s global head of oil, spoke to Bloomberg tv news’s Alix Steel and Guy Johnson on January 11.

Luckock explained that oil markets remained relatively relaxed about threats to production in the Middle East because there were ample supplies elsewhere.

“I think the answer comes back to good old supply and demand, which the oil market has largely ignored for the last three or four years as we have gone from crisis to crisis,” he said. “Supply outperformed last year. The US probably grew by 1m barrels per day which was unexpected… and then there was Guyana and Brazil and other producers also growing.”

“So, supply outstripped demand and that’s what markets are focused on. And the market is pretty relaxed about world events. The price tells you that”, Luckock said, adding later in the interview: “We’re probably in a for a year of range bound prices… $5 each side of where it is now. “

Asked if the US could increase oil output again in 2024, Ben Luckock said the recent burst of mergers and acquisition activity involving companies such as ExxonMobil and Chevron buying smaller rivals would result in “somewhat higher” production.

“The big players in this market have been spending huge amounts of money to really understand and push for efficiency. We have a lower growth target for this year; 300,000 to 400,000 barrels per day, but these are still big numbers. It all adds up to more than 13m b/d [of total production] in the US. So really very significant.”

Turning to China, he said it had accounted for around half of global oil demand growth last year but also noted the country’s big push into battery powered electric vehicles.

“The data isn’t exactly clear, but it may be that you will never see more gasoline consumed in China than you do this year. They are all-in on the EVs,” he said.