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The worst of the oil market is behind us, Saudi Arabia’s Energy Minister Abdulaziz bin Salman told CERAWeek’s India Energy Forum on Monday.
“We continue to monitor. I think there is a big shift in terms of where we are today and where we were in April and May, ”added bin Salman.
But it’s unclear what part of the worst is in the rearview mirror.
If the energy minister refers to oil demand, the largest crude importer, China, is expected to cut imports after the oil-hungry nation has bought extra crude in recent months to take advantage of extremely market prices. bass. . So much so that if China had taken more crude oil, it would have created a customs backlog, which is now clearing customs, a sign that it is slowing down.
This is to be expected now that oil prices have rebounded to nearly double those in April.
But along with these higher oil prices, the bargain hunt in the oil market ends, and thus the end of artificial demand.
In the US market, the worst is not over. Oil production continues to decline, not even stable, let alone increase. With an average of 9.9 million barrels of oil produced per day, the United States produces 3.2 million barrels per day less than in April. Despite the decline in production, crude oil inventories in the United States are still 10 percent above the five-year average.
Furthermore, the space for mergers and acquisitions is heating up, with major mergers in Canada and the United States as ailing oil and gas companies are captured by those best placed to tackle the pandemic. Notable mergers include Chevron and Noble, Pioneer and Parsley, and most recently, Cenovus and Husky. This indicates that the worst has not passed and further mergers are expected in the coming quarters as companies weaken.
But these signals won’t stop oil-dependent countries like Saudi Arabia from venturing to prevent oil prices from dropping too much.
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