Market Expert Says $100 Oil Is in Sight

by Bloomberg | Yongchang Chin
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Oil prices still have upside from here because of booming travel in China and restricted supply from OPEC+, according to Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC.

Domestic flights in China are already back to 110% of their pre-pandemic levels and long-distance road travel is still dominated by gasoline-powered cars, he said he said in an interview at APPEC by S&P Global Commodity Insights in Singapore on Monday.

“You’re gonna have a big increase in jet fuel demand probably of something like 500,000 barrels a day of jet alone in China,” he said.

Brent oil futures have already surged by almost a quarter since late June as deep supply cuts by Saudi Arabia, Russia and other producer nations scale back output and wider financial markets price in less risk of recession in key economies like the US. Brent is likely to trade in a range of between $90 and $100 by the end of the year, Ross said. It stood just below $89 on Friday.

In the fourth quarter of last year, Chinese domestic flights were about 75% to 80% of their 2019 pre-pandemic levels, and now they’re already back to 110%. International have rebounded from very low levels to about 75%, he said.

Road travel in China is also looking bullish, he said.

“Gasoline sales have been absolutely astonishing during the summer in China,” he said. “People are driving like crazy. The year-on-year comparisons are going to be dramatic.”

While there’s a huge uptake of electric which could dent gasoline usage, Ross said that for longer road trips, drivers still seem to be using vehicles with traditional engines rather than electric ones. “So I don’t think Chinese demand is ready to peak yet.”

Ross also said:

• Substantial stockpile draws if OPEC+ extends 1 million-barrels a day curbs
• G-7 nations will raise the cap on Russian oil prices if that’s what’s needed to maintain flow
• Product markets likely to be tight due to a large number of unplanned outages this year ranging from the freeze in the US, to strikes in France, to issues caused by the heat wave.

by Bloomberg | Yongchang Chin
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas