(Bloomberg) --
The world's largest independent oil trader doubts that new coronavirus lockdowns in Europe will lead to another significant drop in crude prices following last week's rout.
“This is a speed bump,” Mike Muller, the head of Asia for Vitol Group, said in an interview Sunday with Dubai-based consultant Gulf Intelligence. “We are not going to see a violent reaction in price on Monday.”
Benchmark Brent crude fell 10% in the five days through Friday to $37.46 a barrel, its lowest since May, as daily Covid-19 cases hit a record in the U.S. and nations including France and Germany announced new lockdowns. The U.K. followed suit on Saturday.
Read more: Europe's Virus Woes Multiply With Leaders Drifting to Lockdowns
While energy demand in Europe is being hit, global oil inventories fell at a rate of around 2 million barrels a day in September and October and that trend will probably continue, according to Muller.
“We are seeing demand destruction unexpectedly from these lockdown measures -- hundreds of thousands of barrels-per-day-equivalent for Europe alone,” he said. “But the bigger, overriding picture is still that the world is in a stock-drawing mode.”
Last year, daily oil consumption in Europe totaled 14.9 million barrels, according to data from BP Plc. Demand was 1.5 million barrels a day in France and 2.3 million in Germany.
OPEC+ -- an alliance of the Organization of Petroleum Exporting Countries and other producers such as Russia -- has helped bolster prices since it agreed to output cuts in April. The group was meant to ease those curbs by 2 million barrels a day in January, but it may be forced into a delay given oil's renewed weakness.
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