There was a weekly increase in oil price even as Saudi Arabia has pledged the continuation of production cuts in the second half of 2016. Recent data from the Energy Information Administration revealed that for the first time this year, there was a fall in United States inventories. According to the Saudi Arabia’s energy minister, Khalid Al-Falih, OPEC and its partners may extend output cuts beyond June should global stockpiles stay above an average of five years.
He commented that there was a fall in oil output as it was below 10 million barrels per day beyond what it produced as a global output cut deal between OPEC and non -OPEC producers.
Speaking at the Atlantic Council Global Energy Forum in Abu, Dhabi, the minister said that Saudi Arabia since last year cut oil production below 486,000 barrels per day under a global deal to prevent fall in oil prices. “For us, a projection of six months is unwise at least for now. I can only say few weeks ago that everyone around the table has expressed willingness to extend if the need arose.”
At this stage, recovery is fragile. In the month of April, West Texas Intermediate was $48.89 per barrel on the New York Mercantile. Falih maintained that he expected a tight in oil market for the next two to three years, supported by the agreement before OPEC and non-OPEC producers late last year to control production.
For 2017, he predicts oil demand will increase by 1 million barrels per day.