Global commodity traders Gunvor and Trafigura anticipate oil prices may range between $60 and $70 per barrel due to sluggish demand from China and persistent global oversupply, executives told at the Asia Pacific Petroleum Conference (APPEC) on Monday.
Oil prices have been under pressure due to concerns about waning demand in key economies China and the U.S. - despite earlier expectations of summer demand being supportive - dipping after touching over $90 a barrel earlier this year.
Market relief came after the Organization of the Petroleum Exporting Countries and its allies, the group known as OPEC+, agreed last week to delay a planned oil output increase for October and November. However, commodity traders warn this relief may be short-lived.
"The market got a little bit of sugar candy for two months, but really very little," Ben Luckock, global head of oil at Trafigura, told the APPEC, adding that oil prices may fall 'into the $60s sometime relatively soon.'
"The market wants to know ... that OPEC is not going to bring those barrels back or at best is going to bring it back much slower and on a deferred basis."
Oil's fair value is $70 per barrel as there is more oil currently produced globally than consumed and the balance is set only to worsen over the next few years, said Torbjorn Tornqvist, co-founder and chairman of energy trader Gunvor.
"The problem is not in OPEC, because they've done a great job to manage this," Tornqvist said. "But the problem is that they don't control where the growth is right now outside OPEC, and that's substantial."
It says that could hurt the supply of metals needed for critical transportation, construction and agriculture projects.
Oil futures, jumped by a dollar in early Monday trade as a potential hurricane system approached the U.S. Gulf Coast. Later, however, they handed back their gains.
The International Energy Agency (IEA) expects oil supply growth this year to reach 770,000 barrels per day (bpd), boosting total supply to a record 103 million bpd.
That growth is set to more than double next year to reach 1.8 million bpd, with the United States, Canada, Guyana and Brazil leading gains.