Oil prices will likely range between the low $50s and low $60s a barrel in 2017 and are unlikely to hit $70 a barrel due to excess supply, the Asian head of energy and commodities trader Vitol said on Tuesday.
March was a particularly tough trading period as it falls between peak winter and summer demand and many Asian refineries conducted maintenance, said Dato’ Kho Hui Meng, president and managing director of Vitol Asia, a unit of Rotterdam-based Vitol , the world’s largest independent energy trader.
“The crude market tends to be a bit more in surplus than usual because of a lack of refining capacity,” Kho told reporters on the sidelines of a shipping conference.
But he said it was still not clear if the market would pick up once refineries came back on stream.
While demand is growing globally, especially in Europe, China, India and the United States, it is still being outpaced by supply, he said.
The volume of crude oil shipped from the United States to Asia has also spiked, especially to the Shandong area in China from late last year to early this year, Kho said.
Lower production costs in the United States as producers improve efficiency, a 2020 global cap on sulphur emissions that will favour lighter US crudes and cheaper freight rates may mean even more US crude flowing east.
Kho said light distillates, which include naphtha and gasoline, and liquefied petroleum gas will continue to grow in Asia.
“The growth in Asia tends to be more cars, more cooking and petrochemical industries (are) still quite good,” he said. Residual fuel demand growth may slow.