Newly appointed Saudi Oil Minister Khalid Al-Falih declared the oil glut over during a visit to Saudi Aramco facilities in Houston, Texas, today.
Speaking to the Houston Chronicle about the oil crisis the and the supply glut, Al-Falih said, "We are out of it," and noted that we would continue to see gradual upward movement in the price of oil.
"The oversupply has disappeared. We just have to carry the overhang of inventory for a while until the system works it out," the oil minister was quoted as saying.
Others are also expressing bullish sentiments.
Raymond James & Associates is forecasting that West Texas Intermediate (WTI) could hit targets between US$70 and US$80 by the end of next year. Their rational is that even though prices are rising and this tempts U.S. producers to start pumping again and revive the supply glut, they will not be able to do this immediately. Related: $1 Trillion In Spending Cuts Could Lead To An Oil Price Spike
The Energy Information Administration (EIA) today reported a 900,000 barrel draw on U.S. crude inventories, but that still leaves a 530.6-million-barrel stockpile that will take some time to chip away at, according to the Saudi oil minister.
"The question now is how fast you will work off the global inventory overhang. That will remain to put a cap on the rate at which oil prices recover. We just have to wait for the second half of the year and next year to see how that works out," the Minister told the Houston Chronicle.
Al-Falih also noted on the Saudi Aramco website that due to the Saudi kingdom's "strategic importance" it will "be expected to balance supply and demand once market conditions recover."
By Charles Kennedy of Oilprice.com
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