Vitol’s Taylor Expects More OPEC Oil, Brent to Slide to $90-$100

The Organization of Petroleum Exporting Countries will probably increase oil supplies in the next four months, reducing Brent prices to a range of $90 to $100 a barrel, Vitol Group’s chief executive officer said.

“If OPEC put more barrels into the market, which we expect will happen sometime in the first half of the year, then we do believe prices will stabilize below current levels and move to a range between $90 and $100,” Ian Taylor said today at an International Petroleum Week event in London.

Brent futures surged to a two-year high of $108.70 a barrel yesterday as intensifying violence in Libya, holder of Africa’s largest crude reserves, heightened concern that supplies may be disrupted. Brent will likely take “center stage” as the world’s oil benchmark, replacing the U.S. marker, West Texas Intermediate, Taylor said.

There is a “relative surplus” of production capacity across the energy market, including oil, liquefied natural gas, and tankers, Taylor said. Crude stockpiles are “comfortable,” and the OPEC has spare production capacity of about 6 million barrels of daily output, he added. This would be “quickly” deployed in the event of Libyan exports being halted, he said.

Oil prices, up 35 percent in London in the past year, have climbed because of a combination of “robust” economic growth and “significant” buying by funds and other financial investors, Taylor said. Funds have invested about $350 billion in commodities in the past decade, he said.

London’s Brent contract, normally cheaper than WTI, is about $12 more expensive than the U.S. benchmark on concerns that excess supplies in the U.S. are undermining WTI’s ability to reflect global market conditions.

“The more reliable Brent futures contract will take center stage,” Taylor said. “It may take many months or possibly years for the logistical changes to be made which will allow WTI demand increases to meet the supply.”

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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