A day after oil prices plummeted again amid global market sell-offs and fears of oversupply, Saudi Energy Minister Khalid al-Falih said that he expects global oil inventories to drop by the end of the first quarter next year.
The oil market is vulnerable to political and economic factors and market speculation, al-Falih told reporters in Riyadh on Wednesday.
OPEC and its Russia-led non-OPEC partners in the production cut deal are committed to drawing down the global oversupply, the energy minister of OPEC’s largest producer Saudi Arabia said.
“We remain focused on fundamentals, I can tell you we will achieve balance between supply and demand in 2019,” al-Falih noted, as quoted by Reuters.
On Tuesday, oil prices crashed to a year-low, as the market continues to be concerned with the oil oversupply and a possible slowdown in global economic growth that could lead to lower oil demand growth. On Monday and on Tuesday, oil prices were also hit by a global sell-off in equities.
Further weighing on oil prices later on Tuesday came the report by the American Petroleum Institute (API) which pointed to a surprise crude oil inventory build of 3.45 million barrels for the week ending December 14, compared to analyst expectations that we would see a draw in crude oil inventories of 2.475 million barrels.
Since the OPEC/non-OPEC new production cut deal was struck on December 7, the oil market has been unconvinced that the 1.2 million bpd cut for six months starting in January would be enough to offset inventory builds at a time when the global markets fear a slowdown in economic growth and at a time of rising U.S. oil production.
On Wednesday, oil prices steadied after Tuesday’s plunge and were slightly up in early morning trade. At 09:09 a.m. EDT, WTI Crude was up 0.54 percent at $46.85 and Brent Crude was up 0.21 percent at $56.38.
By Tsvetana Paraskova for Oilprice.com
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