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(Bloomberg) — The world’s biggest commodity traders are increasingly confident of a bullish oil market into the second half of the year after prices pierced $90 a barrel for the first time in months. 

At an annual gathering in Lausanne on the shore of Switzerland’s Lake Geneva, some of the most senior figures in commodities markets lined up to paint an optimistic outlook for demand — and prices — later this year. 

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Led by OPEC+ supply cuts that have kept global inventories in check and assessments of demand that are improving by the day, the views of leading trading houses have shifted markedly in just a few weeks. Brent crude is currently trading near a five-month high as strong supply-demand fundamentals combine with a significant dose of geopolitical risk due to the ongoing war in the Middle East.

Russell Hardy, chief executive officer of Vitol Group, the world’s largest independent trader, said his firm now expects demand growth of 1.9 million barrels a day this year — that’s more than 30% higher than the current view of the International Energy Agency, which acts as the industry standard. 

If achieved, that figure would almost match the growth from 2023, which was unusually high as the world continued to emerge from the Covid pandemic. Rivals Trafigura Group and Gunvor Group also expressed optimism around demand, citing strong global economic growth and robust recent data respectively.

“We are on track to have an extremely tight global oil market,” Sebastian Barrack, head of commodities at hedge fund Citadel said on Monday at the FT Commodities Global Summit. “OPEC has definitely regained control.” 

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There were several anecdotal signs of strong consumption on Tuesday alone. 

A new Chinese mega refinery received about 170,000 barrels a day of import quotas, pointing to continued gains in crude demand for the world’s largest importer. Gasoline sales in Spain were up almost 9% in February, a sign that even in Europe — where many traders have been pessimistic about consumption — there are strong pockets of demand. The US Energy Information Administration also revised its own estimate of global demand  higher by almost 500,000 barrels a day. 

On the other side of ledger, there have been sudden hits to supply beyond the OPEC+ curbs. Mexico’s decision to restrict some of its exports has tightened markets for certain types of crude as traders scrambled for alternatives. 

Amrita Sen, co-founder and director of research at consultant Energy Aspects said at the conference that Mexico’s move was “a bit of a shock to the market.”

The focus will now turn back to OPEC+, which will decide in June whether to bring barrels back as prices climb. Vitol’s Hardy said he expects that if crude strays beyond $100 a barrel the market will start to see demand destruction, as well as a supply response from the producer group.

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“$80 to $100 feels a sensible range,” he said. 

In the short-term, the tone across the world’s oil trading desks has shifted markedly more bullish. Friday saw one of the most active days of trading of call options that profit from higher prices on record. Key corners of the futures curve suggest markets are currently under-supplied. 

With a seasonal demand uptick due over the summer, many traders expect there could be a further rally to come for oil prices in the coming months. 

“Everything is changing quickly,” Torbjorn Tornqvist, co-founder and chairman of commodity trader Gunvor Group said. “Opec is doing a great job and holding back just enough oil to keep this market tight. But it is spare capacity and can be release any time.”

—With assistance from Bill Lehane and Julia Fanzeres.

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