BEIJING (AP) — The U.S. energy secretary said Friday he sees the global oil market coming into balance over the next year as rising demand catches up with a two-year-old supply glut that depressed prices.
Ernest Moniz said supplies should be adequate after the market comes into balance. He said Saudi Arabia has made clear it will maintain spare production capacity if it is needed by the market.
Moniz spoke after meeting with his Saudi counterpart, Khalid al-Falih, while both were in Beijing for a gathering of energy ministers from the Group of 20 major developed and emerging economies.
The Saudi minister told the Houston Chronicle on June 22 the oversupply of oil was ending and he expected markets to come into balance this year.
"That's reasonable, although it could also go into next year," said Moniz. "Let's say, within the next year, most of the people would expect a balance in the market."
Crude prices tumbled from 2014 highs of more than $100 a barrel to a 13-year low of less than $30 in mid-February before rising to just under $50.
"We still are in a situation of more production than demand," said Moniz. "The gap is narrowing as global demand goes up slowly and production is not going up."
Moniz said higher prices could lead to more supply as operators develop additional U.S. wells.
"As prices go up — $50, $60, $70 — you probably will see more of those wells being completed," he said. "The market seems to be pretty well supplied, and there is no reason to think there will be a big change over the next couple of years."
Moniz said the Saudi minister has made clear his government wants to rely on market forces to set prices instead of quotes.
"He has made it very clear that Saudi Arabia intends to maintain spare capacity should that be needed in the market," he said.