“I’ve Never Seen Anything Like That”: Jeff Currie Claims Fears Of An Oil Market Glut Are “Completely Overplayed”

By Charles Kennedy of OilPrice.com

Oil market participants are “dramatically overestimating” a supply glut, as Chinese demand is not as doom-and-gloom as headline figures suggest and U.S. crude oil production is basically flat this year, Jeff Currie, chief strategy officer of energy pathways at Carlyle, said on Tuesday.

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

According to Currie, Chinese “weaknesses in demand are being deeply exaggerated by base effects and by destocking.”

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

Hedge funds and other money managers accelerated their selling in the most traded petroleum futures contracts in the latest reporting week to September 3. Portfolio managers slashed their overall net long position—the difference between bullish and bearish bets—to the lowest level since exchanges began compiling such data in 2011.

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

The top executives of some of the biggest independent oil traders also said this week that supply is outstripping demand.

Ben Luckock, Global Head of Oil at Trafigura, expects Brent to drop into the $60s handle, although he warned that traders shouldn’t put all their eggs in the basket of shorts.

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

The problem with oversupply is not the OPEC+ policy but the fact that the group doesn’t have control over the jump in non-OPEC+ supply, Tornqvist said.