Almost 1 Bbbl of oil held in inventories must be used up before global supply and demand are closer to balance, Dana Gas PJSJ CEO Patrick Allman-Ward said.

“We still have a significant global storage of oil, close to a billion barrels,” Allman-Ward said Tuesday in a Bloomberg TV interview with Francine Lacqua at the World Economic Forum in Davos, Switzerland. Dana Gas, based in the United Arab Emirates, explores for and produces natural gas in the Middle East.

The Organization of Petroleum Exporting Countries and 11 other producers, including Russia, agreed to cut output by a collective 1.8 MMbopd to remove a surplus that had kept crude prices languishing at about $50/bbl for the past two years. The six months of cuts are scheduled to expire in June. Brent crude, an international benchmark, was 63 cents higher at $56.49/bbl in London at 10:08 a.m. local time.

“There is some optimism that with the balancing that was already taking place from the third quarter of last year, that there would not be necessity for continued cuts,” Allman-Ward said. “We’ll need to work that storage away before we can really say we’re in a firm supply demand balance.”

Source: http://www.oedigital.com