US Energy Secretary Steven Chu said Monday that he agrees with Saudi Arabian oil minister Ali Naimi's comment Sunday that there is excess crude on the market.
Oil markets do have "extra, spare capacity" despite the situation in Libya that has trimmed some output, Chu said on a conference call. "I have been following this very closely, and as you know there appears to be roughly 4 million b/d [of] extra capacity."
Chu said he thought Naimi was indicating in his comments that refiners are simply not bidding on this additional supply.
Naimi on Sunday said the world oil market was "oversupplied." He also said the OPEC kingpin pumped 8.29 million b/d in March, which would suggest a cut of roughly 700,000 b/d from February, an indication there was a lack of demand for the barrels the Saudis had promised in the wake of Libyan disruptions.
NYMEX May crude settled $2.54 lower at $107.12/barrel on Monday on Naimi's comments and weaker equities markets.
