Oil oversupply that sent prices to a five-year low probably will persist until at least the second half when demand is set to recover, according to Kuwait’s oil minister and the OPEC governor of the United Arab Emirates.
Faster global economic growth will be needed to help absorb the oil surplus estimated at 1.8 million barrels a day, Kuwait Oil Minister Ali Al-Omair told reporters in parliament. A demand-led recovery is seen in the second half, the U.A.E.’s Governor to OPEC Ali Al Yabhouni told reporters at a conference in Abu Dhabi.
Oil fell about 40 percent since the Organization of Petroleum Exporting Countries chose to maintain its production target at a Nov. 27 meeting, seeking to defend market share rather than prices. The U.A.E. and Kuwait are OPEC members. Slowing economic growth has contributed to the drop in prices, Al-Omair said.
“We are expecting that this situation will continue until the surplus oil is absorbed and the world economy improves,” Al-Omair said. “Forecasts indicate that this will not happen before the second half.”
OPEC produced 30.2 million barrels a day of oil in December, down from 30.36 million barrels in November, data compiled by Bloomberg show. China’s gross domestic product climbed 7.4 percent last year, the slowest expansion since 1990, according to economist estimates compiled by Bloomberg.