US Energy Secretary says “we continue to have a very very large inventory of oil”
By Osamu Tsukimori
KITAKYUSHU, Japan, May 2 (Reuters) – US Energy Secretary Ernest Moniz said he expects global oil supply and demand to rebalance in about a year’s time.
Benchmark crude oil prices , which hit almost 13-year lows earlier in 2016, surged nearly 20 percent in April on a softer dollar and lower U.S. production. However, market participants remain sceptical about the sustainability of the rally given a persistent global supply overhang.
“The recent rise in prices is not something I think that the companies are willing to reverse their investment trends on,” Moniz told reporters on Monday after the G7 energy ministers’ meeting in Kitakyushu, southwestern Japan.
“Rig counts in the United States are quite low … a rebalancing of global supply and demand looks to be quite credible, roughly speaking on a one-year time scale.
“That may change the dynamic but structurally we clearly continue to have a very very large inventory of oil,” he added.
“We are still unbalanced.”
U.S. oil output is expected to drop by 600,000 barrels per day (bpd) this year from a year ago as producers respond to low crude prices, Moniz said, citing U.S. Department of Energy projections.
In the LNG market, Moniz said exports had started as the United States had authorised the shipment of more than 120 billion cubic metres of natural gas a year to non-Free Trade Agreement countries.
“First six, maybe now seven, since we’ve been travelling, LNG cargoes have left the Gulf of Mexico actually for three continents, including Japan,” he said.
Amid the background of growing LNG production elsewhere such as in Australia, “we expect LNG markets to be quite well supplied”.
(Editing by Himani Sarkar)