Traders resigned to current range for crude prices

The largest oil traders are anticipating little relief to what has become the worst market slump in a generation.

More than a dozen senior traders and executives recently interviewed expect crude to remain between $40 and $60 a barrel over the next 12 months.

While crude has climbed from the 12-year lows reached in February, a supply glut caused by the U.S. shale boom is pinning prices at half the levels of two years ago. Oil settled at $45.88 a barrel Friday in New York.

“The issue is that once prices go up too fast, American drillers start to produce more,” said Arzu Azimov, head of Socar Trading. “The market will stay in the corridor of $40 to $50, max $55.”

The majority of oil traders said market re-balancing has been pushed back by at least six months from their projections in early 2016 because of higher-thanexpected production from Iran and Saudi Arabia, coupled with the resilience of U.S. shale output.

“The oil market isn’t yet balanced,” said Saad Rahim, chief economist at oil trading house Trafigura Group. “The market has yet to start working through millions of barrels of inventories accumulated during the downturn.”

Oil prices have jumped more than 10 percent since early August amid speculation that Saudi Arabia and Russia can marshal a production freeze, but the Saudis are pumping record amounts of crude, while Russian oil output climbed above 11 million barrels a day for the first time since at least 1991, according to government data.

Oil and natural gas companies have cut more than 350,000 jobs worldwide since crude prices started to fall in 2014. In Texas, energy companies have cut more than 100,000 jobs.