The worst of the oil market is behind us, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said on Monday at CERAWeek's India Energy Forum.

"We are still vigilant. I think there is a big shift all together in terms of where we are today and where we were in April and May," bin Salman added.

 But it is unclear what part of the worst is in the rearview.

If the Energy Minister is referring to oil demand, the largest importer of crude oil—China—is expected to slow its imports after the oil-thirsty nation bought extra crude over the last few months to take advantage of the ultra-low prices in the market. So much so had China taken extra crude, it created a backlog in customs, which is now clearing up—a sign that it is slowing.

This is to be expected now that oil prices have rebounded to nearly double what they were in April.

But along with those higher oil prices comes an end to the hunt for bargains in the oil market—and consequently, the end to artificial demand.

In the U.S. market, the worst is definitely not behind it. Oil production is still falling—not even holding steady, let alone increasing. At an average of 9.9 million barrels of oil produced per day, the United States is producing 3.2 million bpd less than it was in April. Despite the dropoff in production, U.S. crude oil inventories are still 10 percent above the five-year average.

What's more, the merger and acquisition space is heating up, with notable mergers in Canada and the United States as struggling oil and gas companies are snatched up by those better situated to whether the pandemic. Notable tie-ups include Chevron and Noble, Pioneer and Parsley, and most recently, Cenovus and Husky. This indicates that the worst is not behind us, and more mergers are expected in future quarters as companies falter.

But those signs won’t stop oil-dependent countries such as Saudi Arabia from jawboning to keep oil prices from falling too far.

By Julianne Geiger for Oilprice.com

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