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Vitol’s Taylor Says $100 Oil Price Is Nothing Special

Crude can move either side of $100 a barrel with neither direction currently dominating, aside from a longer term bias for gradual gains, said the head of Vitol Group, the world’s largest privately held oil trader.

Brent crude futures sank below $100 on April 16 for the first time since July and have oscillated either side of that level in the days since, trading at $100.53 at 12:58 p.m. London time today on the ICE Futures Europe exchange.

“On oil, I don’t see any great movement in the days to come,” Vitol Chief Executive Officer Ian Taylor said in Abu Dhabi. “There’s nothing special about $100. It can go a bit higher or a bit lower.”

Oil at $100 a barrel is a “reasonable” price that won’t choke global economic growth, Saudi Arabian Oil Minister Ali Al- Naimi said in Hong Kong on March 18, a day when Brent crude futures settled at $108.17. Brent crude is down 10 percent this year, after gaining 3.5 percent in 2012.

Vitol is one of several privately-held commodity trading companies that operate from offices in Switzerland, along with Trafigura Beheer BV and Gunvor Group Ltd. Costs for energy trading companies are rising, including regulatory expenses, cutting into profit margins, Taylor said.

Over longer periods of time, the price of oil remains dependent on supply and demand, Taylor said today at the Middle East Petroleum and Gas Conference, without specifying any period for his outlook.

“Exchange-based trading will add to the number of participants in the market who aren’t taking physical volumes,” he said. “They tend to go long over the long term and that tends to raise the price.”

Merchant Refiners

Energy trading companies will continue to diversify, buying assets such as refineries, Taylor said. Vitol is a joint venture partner in Switzerland’s Cressier refinery while Gunvor bought plants in Germany and Belgium. All three of those refineries were bought last year from the insolvency administrators of Petroplus Holdings AG.

Taylor said he expects companies will trade more in refined products than in crude in the future, without specifying any further details or timing.

International trading of liquefied natural gas will probably become “bigger” and “deeper” and Vitol plans to be involved in the expansion of that market, Taylor said. Infrastructure costs and the greater expense of LNG ships versus tankers carrying crude and refined oil products is one of the reasons why LNG trading isn’t already bigger, he said.

To contact the reporters on this story: Wael Mahdi in Abu Dhabi at wmahdi@bloomberg.net; Anthony DiPaola in Abu Dhabi at adipaola@bloomberg.net

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

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