The Oil Glut is Over So says the world’s most powerful oil man. The newly appointed Saudi Oil Minister Kalid Al-Falih declared the oil glut over at the Saudi Armco facilities in Houston, Texas last week.
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.
The Energy Information Administration (EIA) last week 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.” As reported by Charles Kenedy of Oilprice.com.
In Conclusion…Saudi Arabia was unwilling to reduce oil production when the price colapsed November 2014. However, the law of supply and demand has worked to reduce supply and increase demand. It appears that the Saudi’s impact on oil pricing is on the wane. Nevertheless, Al-Falih recent comments may give some reason to hope for better days to come in the oil patch.