Saudi energy minister Khalid al-Falih said Monday at an industry conference in Kuala Lumpur that he was confident that the crude oil output cut deal will be extended by six months or more as the market was moving towards rebalancing.
"Based on the consultation I have had with participating members, I am rather confident that the agreement will be extended into the second half of the year and possibly beyond and that includes consultations I have had this morning with the Malaysian prime minister," Falih said during the opening address at the 19th ASIA Oil and Gas Conference in Kuala Lumpur.
The producer coalition is determined to do "whatever it takes to achieve our targets and bringing stock levels back to the five-year average."
Falih said he was pleased that OPEC and non-OPEC partners that agreed to the supply cuts are so far exhibiting discipline and adherence to the commitments that were made last December.
Falih's comments come ahead of the meeting of OPEC and non-OPEC deal participants scheduled to be held in Vienna on May 25 to review the agreement and negotiate any extension.
Falih also said that leading indicators showed crude supply-demand was in deficit as the market was moving towards rebalancing.
"I do believe however that the worst is behind us with multiple leading indicators showing that supply-demand balance are clearly in deficit and the market is moving towards rebalancing. We should therefore expect healthier markets going forward," he said.
Falih said he was pleased to see that OECD stocks have been gradually declining since the middle of last year.
"Floating stocks, for which less data is available, have also declined considerably," he added.
Markets however have been impacted by a combination of slow seasonal demand and refinery maintenance, some growth in non-OPEC supply -- especially in the US -- and the action of financial players in the market, he said, adding that all of this has slowed down the impact of the production cuts agreed by the coalition of producers in December.
He said he expected inventories in the US, which have been the focus of analysts, to trend lower on rising refinery throughput underpinned by seasonality, and on US demand showing signs of continued growth in 2017.
