The six-month rally in global oil markets could grind to a halt at a price of $50 a barrel as a string of recent production outages comes to an end, according to the world’s biggest independent oil trading house.

Vitol’s chief executive Ian Taylor said the market may stall at the $50 mark for the rest of the year after a quicker-than-expected recovery, before creeping slowly up to around $60 by the end of next year.

Earlier this year Vitol predicted a market price of $48 a barrel for crude towards the end of the year but Mr Taylor told Bloomberg that he would “not be surprised” to see the oil market end the year “a tad” higher after a string of unplanned outages in the last quarter helped eat into the glut of global supply.

“There were special factors in the second quarter: Kuwait strikes, Canadian wildfires, Nigerian disruptions, which all helped to reduce supply quite a bit and helped to give the market a little bit of a tighter feel,” he said.

Mr Taylor cautioned that the second half of the year could see demand growth slow as the unplanned production outages end. By the end of next year the price may reach “the high fifties, early sixties,” he added.

The latest estimates from the influential trading house challenge the ‘lower for longer’ assumptions of oil majors BP and Shell, which have both said they expect the market to rebalance in the second half of the year, and support oil prices at around $60 a barrel mark by early 2017.

Goldman Sachs has also panned expectations of $60 oil within the coming months, saying the “fragile” oil price recovery will remain between $45 a barrel and $50 a barrel, barring a massive supply disruption.

On Tuesday oil prices tumbled almost 4.5pc to just below $48 a barrel as economic woes weighed on the market. A shaky global economic outlook combined with the uncertainty surrounding the UK’s decision to exit the EU has sent the dollar to 31-year highs against the pound, making dollar-denominated crude more expensive for UK traders.

Thomson Reuters oil analyst Shakil Begg said that renewed concerns over the health of the global economy pushed oil lower in spite of reports of fresh attacks to Nigerian oil installations by militant groups.

“Financial market uncertainty coupled with expectations of sluggish trade and industrial growth in China has raised concerns over the strength of oil demand from emerging markets. High refined product inventories within Europe also remain a concern with demand growth potentially at risk from greater economic uncertainty after the UK’s EU referendum decision,” he said.

A militant group in Nigeria said it blew up one well and two pipelines on Tuesday, potentially derailing the country’s brief recovery in oil supplies from 30-year lows in recent weeks. Meanwhile, Opec output growth has been limited in the past few months following a series of outages in Iraq, Venezuela, Libya and Nigeria, which have helped to tighten market balances.

Separately, US oil giant Chevron said on Tuesday it would push ahead with the largest oil project to get the green light since the global oil price crash in late 2014. It will spend $36.8bn (£28.15bn) expanding its Tengiz oil basin in Kazakhstan to add around 260,000 barrels of oil a day to its portfolio.

Jefferies analyst Jason Gammel said the Tengiz expansion was “by far the largest project sanctioned in the industry since the oil price downturn” and estimated it could earn Chevron $3bn over its lifetime, from 2022 to 2033.

Source: www.telegraph.co.uk