Oil at $50 to $55 a barrel would put producers in a “good position” with stockpiles expected to fall later this year, according to Kuwait’s Oil Minister Issam Almarzooq.

Kuwaiti Oil Minister Issam Almarzooq discusses the price, production and inventory of oil.

“I think if we can retain $50 to $55 throughout 2017 I think we will be in a good position,” Almarzooq said in a Bloomberg TV interview from Kuwait City. Brent crude, the global benchmark, has dropped 11 percent this year, and was trading at $50.46 a barrel by 12:35 p.m. in Dubai.

Almarzooq said he’s not surprised prices have fallen this year. Despite the cut in production by OPEC and other major producers since January, U.S. inventories have actually climbed because of refinery maintenance, and slow demand in the first quarter, he said.

Kuwait joined OPEC’s biggest producer Saudi Arabia in saying oil inventories need to fall to the five-year average. They now stand about 285 million barrels above that, Almarzooq said. If OPEC and 11 other producers that agreed to reduce output reach their targeted cuts, inventories should fall to the five-year average by the end of the third quarter, he said. Compliance was 94 percent in February, according to the monitoring committee headed by Almarzooq.

The ministerial committee of OPEC ministers from Kuwait, Algeria and Venezuela and their counterparts from Russia and Oman concluded meetings in Kuwait City on Sunday with a statement asking OPEC to review the market and give them a recommendation in April on rolling over the cuts. Kuwait, four other OPEC nations and Oman want an extension of the cuts because more time is needed to drain swollen stockpiles.

Source: Bloomberg