* Aramco CEO sees oil market fundamentals improving
* Nasser sees rapid drawdown in floating storage in Q1
* Long-term investment needed as oil demand seen growing
(Adds details, quotes)
By Alex Lawler
PARIS, April 27 The oil market is moving towards
a balance between supply and demand with the help of an
agreement reached between OPEC and other producers to cut
production, the chief executive of Saudi Aramco said on
The Organization of the Petroleum Exporting Countries,
Russia and other producers agreed to cut output by 1.8 million
barrels per day (bpd) for the first half of 2017, although
persistent high global inventories have depressed oil prices.
OPEC meets again on May 25 and is expected to extend the
pact until the end of 2017 in a bid to end the supply glut.
"The market is moving toward rebalancing," Aramco's CEO Amin
Nasser told a conference in Paris. "I see the oil market
pointing upward and expect it to continue improving."
"This returning confidence is being driven by improving
fundamentals, and accelerated by the production agreement
reached last year," he said referring to the OPEC-led cuts.
Despite short-term volatility in oil prices, he said there
had been "a rapid drawdown of floating storage during the first
quarter of this year."
Oil prices dipped on Thursday, weighed down by concerns
about globally bloated markets, but traders said prices seemed
to have found support around current levels.
Brent futures, the international benchmark for oil
prices, were down 50 cents at $51.32 per barrel at 1025 GMT on
Thursday, but remain above the $46 price level where they traded
in late November just before OPEC announced plans to cut supply.
Nasser said the oil industry needed to continue investing in
long-term project despite short-term price volatility.
"An estimated 30 million barrels per day of oil production
capacity needs to be developed over just the next five years ...
and incremental, short-term, and lower capital investment
projects are just not going to cut it," he said.
"So while the short-term market points to an oil surplus,
the supplies required for the years ahead are falling behind
substantially because the vast, long-term investments in proven
and reliable energy sources are not being made," he said.
He said a lack of investment threatened world energy
More than $1 trillion worth of oil projects have been
cancelled or delayed since mid-2014, when oil prices plunged
from above $100 a barrel.
Nasser said oil would play a key role in meeting future
global energy demand, saying the concepts of oil demand peaking
and leaving stranded resources in the ground were "misleading".
"The conclusion is clear: oil demand will continue to grow
... in absolute terms, at fairly healthy levels, for the
foreseeable future," he said.
(Writing by Rania El Gamal; Editing by Jason Neely and Edmund