MOSCOW (Pakistan Point News / Sputnik - 25th May, 2020) The Russian Energy Ministry estimates the remaining surplus in the global oil market at 7-12 million barrels per day, and hopes the market to balance in June or July, a source familiar with the text of the speech of Russian Energy Minister Alexander Novak at the meeting of the State Council's working group on energy, told Sputnik.
"Actually, there is still a surplus in the market, the supply is from 7 to 12 million barrels per day higher than demand, but we hope that in June, taking into account the continuing growth in demand, we will reach zero balance, the market will be balanced in June or July," the source, who was present at the meeting, said.
The ministry sees a recovery in global oil demand in May by about a fifth from April's lows, the source said.
"We are already observing now, in May, the first signs of a recovery in demand as restrictive measures are lifted in many countries, this really gives an increase in demand. We see that demand has recovered by about 20 percent in relation to the worst period in April. If oil demand was down about about 25-27 percent [year-on-year] in April, today demand is about 20 lower compared to last year," the source said, referring to the minister's speech.
Russia has reached the target level of oil output cuts under the OPEC+ agreement, reducing the production by promised 2 million barrels of oil per day, the source said.
The ministry believes that countries outside OPEC+, including the United States, Canada and Norway, have already reduced oil production by a total of 3.5-4 million barrels per day, he said.
"Thus, approximately 14-15 million barrels per day were withdrawn from the market, and this, taking into account the growth in demand, has significantly improved the balance," he added.
The ministry also believes that suppliers struggle at low prices in liquefied natural gas (LNG) markets in major consumer regions, he said.
"In the main consumer regions, in the Asia-Pacific region, we see an increase in demand for LNG, and decrease for pipeline gas. That is, at the moment there is a fairly competitive struggle in the low price ranges for the supply of liquefied natural gas. And the spot LNG price today has fallen by 50 percent," the source said, referring to Novak's speech.
