Saudi energy minister says oil market fundamentals improving

Tue Mar 7, 2017 8:17pm EST
 
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By Liz Hampton and Marianna Parraga

HOUSTON (Reuters) - Saudi Energy Minister Khalid al-Falih said on Tuesday that oil market fundamentals were improving after an agreement struck with top oil producers to curb supply and end a two-year glut took effect.

The kingdom led a pact between the Organization of the Petroleum Exporting Countries and other major producers, including Russia, Mexico and Kazakhstan, to cut global crude output by about 1.8 million barrels per day (bpd) from Jan. 1, and bring supply closer to demand.

Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom's output below 10 million bpd, he said. Suppliers participating in the curbs have cut more than 1.5 million bpd, he said, exceeding what he called the market's low expectations.

Global oil demand would grow by 1.5 million bpd in 2017, and increased output from the United States, Brazil and Canada would be more than offset by natural declines in aging fields, he said.

"There is... cause for cautious optimism as we see the 'green shoots' of the recovery," Falih told energy executives and oil officials gathered at the CERAWeek industry conference in the U.S. energy capital of Houston.

Benchmark Brent crude futures closed at $55.92 a barrel on Tuesday, and are up more than 10 percent since the output curb deal was struck in November.

Still, he cautioned against any "irrational exuberance" among investors.

"We should not get ahead of the market," he said.   Continued...

 
Saudi energy minister Khalid al-Falih gestures during the 2017 budget news conference in Riyadh, Saudi Arabia December 22, 2016. REUTERS/Faisal Al Nasser