World's Biggest Oil Trader Warns Crude Prices Could Dive Again

Bloomberg reports:

The world’s biggest independent oil trader said crude could resume a slump that saw prices fall 61 percent between June and January, as unrelenting growth in U.S. output leads to a “dramatic” build in the nation’s stockpiles.

The oil market seems slightly oversupplied and another downward move is possible in the first half of this year, Ian Taylor, chief executive officer of Vitol Group, said Tuesday. There are no signs of slowing U.S. output even as the country’s drillers idle rigs, he said. Oil inventories in industrialized nations may climb near a record 2.83 billion barrels by the middle of the year because supplies remain abundant, the International Energy Agency said in a report.

Brent crude, a global benchmark, has rallied 29 percent from its low point this year. It’s still down by half from last year’s peak as the U.S. pumps the most oil in three decades and OPEC responds by maintaining its own output to keep market share. While companies have pulled rigs off oil fields and cut billions of dollars of planned spending, it will be some time before there is an impact on production, according to the IEA.

“The market looks a little bit long in the first half of the year,” Taylor said in an interview at a conference in London. “We think there are going to be quite dramatic builds in stock for the next few months” before the market moves into balance in the second half.

The supply.