Gunvor Group Ltd. sees pressure for a higher crude price easing next year as more production from outside the Organization of Petroleum Producing Countries compensates for growing world demand.
“You’re not looking at a market in which the fundamentals are tightening appreciably,” David Fyfe, the head of market research and analysis at Gunvor, said in an interview at the Oil & Money conference in London today. “You may get a little less impetus for higher prices.”
West Texas Intermediate crude rose to a two-year high of $112.24 on Aug. 28 amid concern that a U.S.-led assault on Syria would widen the conflict and disrupt Middle East supplies. Syria borders Iraq, the second biggest OPEC producer. Next year, oil demand will grow by about 1 million barrels a day, according to Fyfe.
Continuing instability in the region, including in Syria and Libya, may prevent prices from “any dramatic falloff,” Fyfe said. Brent crude will probably trade at a premium of $6 to $8 a barrel to WTI over the long term, he said.
“When geopolitical concerns ebb and flow, you would normally expect Brent to reflect that,” Fyfe said.
Brent for November settlement slipped $1.18, or 1.1 percent, to $107.19 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $5.85 to WTI.