U.S. Energy Secretary Ernest Moniz said he expects global oil supply and demand to rebalance in about a year’s time. Benchmark crude oil prices, which hit almost 13-year lows earlier in 2016, surged nearly 20 percent in April on a softer dollar and lower U.S. production. However, market participants remain skeptical about the sustainability of the rally given a 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,” Moniz told reporters on Monday after the G7 energy ministers’ meeting in Kitakyushu, southwestern Japan. “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,” he added.
“We are still unbalanced.” U.S. oil output is expected to drop by 600,000 barrels per day (bpd) this year from a year ago as producers respond to low crude prices, Moniz said, citing U.S. Department of Energy projections.