Trafigura chief economist says market hungry for oil, sees scenario for $100/b

London (Quantum Commodity Intelligence) – Oil markets remain in a firm upwards trend as the supply/demand imbalance is set to keep markets on a firm footing, Trafigura's chief economist Saad Rahim told Bloomberg TV Tuesday.

"The current structure is telling you the market is absolutely hungry for oil, you are seeing a very strong demand recovery," said Rahim, referencing the steep market backwardation with front-month Brent currently at around +$0.85/b.

Last week, Trafigura's CEO Jeremy Weir said oil prices could rise to $100/b, largely due to a lack of upstream of investment.

"We have gone from 15 years of oil reserves to 10 years and capital expenditure go from five years ago $400 billion a year to just $100 billion," Weir told the FT Commodities Global Summit.

$100/b scenario

Asked by Bloomberg TV for a timeline on the $100/b scenario, Rahim said, "I think the demand recovery we're looking at, the amount of stimulus that has gone into the system, the liquidity that's there, it's something you could see potentially next year."

However, the Rahim cautioned "conditions need to be right," adding that a move on US interest rates could derail the upwards momentum.

Rahim said there has been a structural underinvestment in oil since 2014, noting that the market has lost significant production from secondary producers including Venezuela, Angola, Mexico, Columbia and Vietnam.

Looking ahead to next week's OPEC+ meeting, Rahim said, 'certainly the backwardation is telling us the market wants more barrels."

Brent prices consolidated at two-year highs this week above $75/b.