The U.S. Department of Energy expects global oil prices to balance themselves out in a year’s time.
Ernest Moniz, the Energy Secretary of the United States has disclosed that he expects the global supply and demand of oil to rebalance within a year’s time.
Earlier this year, crude oil prices, hit their near 13 year lows, but have seen an upward movement by 20% due to decreased U.S. productions and a softer dollar.
Despite this surge, market players are sceptical whether this upward momentum can be maintained given the persistent global supply overhang.
“The recent rise in prices is not something I think that the companies are willing to reverse their investment trends on,” said Moniz having emerged from the G7 energy ministers’ meeting in Kitakyushu, southwestern Japan.
He went on to add, “Rig counts in the United States are quite low … a rebalancing of global supply and demand looks to be quite credible, roughly speaking on a one-year time scale. “That may change the dynamic but structurally we clearly continue to have a very very large inventory of oil.”
His last comment, “We are still unbalanced” was very significant.
As per Moniz, U.S. oil production levels are expected to drop by 600,000 barrels per day (bpd) compared to production levels a year ago. This is largely due to low oil prices. Moniz’s statements base themselves on U.S. Department
Of Energy projections.
As for the LNG market, as per Moniz, the United States has authorised the shipment of nearly 120 billion cubic meters of natural gas a year, to countries with which it does not have a Free Trade Agreement.
“First six, maybe now seven, since we’ve been traveling, LNG cargoes have left the Gulf of Mexico actually for three continents, including Japan,” said Moniz.
With a growing number of producers coming aboard the LNG market, including Australia, Moniz said, “we expect LNG markets to be quite well supplied”.
Categories: Economy & Finance, Geopolitics, Strategy
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