Currie says oil market overshoot fears ‘completely overblown’

Oil market participants are “dramatically overestimating” the supply glut as Chinese demand isn’t as bad as headline numbers suggest and U.S. crude output is basically flat this year, said Jeff Currie, chief strategist of energy pathways at Carlyle, said Tuesday.

Fears of a major oil glut are “completely overblown”, Currie told the Asia Pacific Petroleum Conference (APPEC) in Singapore, where executives from major oil trading houses expressed bearish views on demand and global market balances for the year this year and next year.

According to Currie, the Chinese “weakness in demand is greatly exaggerated by base effects and destocking.”

“The key issue is that the market is dramatically overestimating this flood (in oil supply) and it’s reflected in record short positions … and we’ve never seen anything like this,” Currie said at the APPEC conference, as reported by CNBC. .

Hedge funds and other money managers accelerated their selling in the most traded oil futures in the last reporting week to Sept. 3. Portfolio managers cut their overall net long position – the difference between bull and bear bets – to the lowest level since stock markets began compiling such data in 2011.

Rising global oil supply and weaker-than-expected demand have made traders increasingly bearish on oil prices.

Top executives at some of the biggest independent oil traders also said this week that supply was outstripping demand.

Ben Luckock, Global Head of Oil at Trafigura, expects Brent to fall into the $60s, although he cautioned that traders should not put all their eggs in the shorts basket.

Another major oil trader, Gunvor, also expects Brent at $70. Gunvor co-founder and chairman Torbjorn Tornqvist told the APPEC conference on Monday that the fair value of Brent is $70 a barrel because supply exceeds demand.

The problem with oversupply is not OPEC+ policy, but the fact that the group has no control over non-OPEC+ supply growth, Tornqvist said.

By Charles Kennedy for Oilprice.com

More top reads from Oilprice.com