Aramco’s CEO Amin Nasser told a conference in Paris that “the oil market is moving toward rebalancing.”

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 Thursday.

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

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 security.

More than $1 trillion worth of oil projects have been canceled 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.