The price of oil declined on Monday, partly due to Saudi Aramco’s Chairman, Khalid al-Falih’s comments.
According to The Wall Street Journal, al-Falih said at a conference in Riyadh that the next five years will be critical for the oil market and supply and demand will balance at a “moderate” price.
“Demand will grow, as it has already started in 2015, and there will be a period not far into the future [when] demand will catch up with supply,” Al-Falih said.
Al-Falih also stated that Saudi Aramaco’s investments in its business has not slowed down, despite oil trading at a multi-year low.
“Our investments in capacity of oil and gas have not slowed down,” he said. “We have been able to do a lot of cuts in spending by simply driving down costs.”
Oil traders may have been speculating the chairman’s remarks indicate that oil will remain oversupplied in the near-term and the oil producing nation has no plans to cut back production.
“The Saudi news surely would give a little bit of a worry that production would remain strong,” Daniel Ang, an investment analyst at Phillip Futures, told Zero Hedge. “The main reason for oil losing steam still comes from the fact that oil markets are currently in oversupply.”
The United States Oil Fund LP (ETF) (NYSE: USO) recently traded at $9.05, down 2.3 percent on the day.