Marathon Petroleum CEO thinks the oil glut will finally come to an end

Marathon Petroleum CEO thinks the oil glut will finally come to an end

Marathon Petroleum's CEO believes the OPEC agreement to limit production could finally end a glut of oil that has hit the price of crude.

"We believe by the end of the first half that the global supply of crude can be in balance and might even be a little bit of a supply deficit as we go into the second half of the year," Gary Heminger told "Mad Money" host Jim Cramer on Wednesday.

Crude surged 9.3 percent after the Organization of the Petroleum Exporting Countries agreed to limit oil production for the first time in eight years. The production cut stipulated a decrease in production by 1.2 million barrels a day, from the current 33.6 million barrels produced.

Gary Heminger, CEO, Marathon Petroleum
Scott Mlyn | CNBC

"I believe it has a chance to stick as long as the technical agreements that are going to be put together here over the next couple weeks really come in to where they stated they would be today," Heminger said about the OPEC agreement.

Shares of Marathon Petroleum spiked 2 percent on Wednesday, which was unusual, as a spike in the price of crude can hurt refiners in the short-term. Refining comes down to the difference between the price of oil and the price of gasoline. Thus, higher oil prices tighten the margin.

Last week, activist hedge fund Elliott Management took a 4 percent stake in Marathon. It proposed various steps to unlock value, which it believes could send the stock soaring 60 to 80 percent. The stock spiked 9 percent in the same day as a result.

Cramer suspected that the activist involvement and potential to unlock further value could be one of the key reasons why Marathon Petroleum's stock did not fall on Wednesday while other refiners struggled.

Moving forward, Heminger was also optimistic about what President-elect Donald Trump's administration could mean for the oil and gas industry. He has pledged to roll back regulations on U.S. energy production.

"I am very confident that the president-elect is very intelligent, he is surrounding himself with very intelligent people that understand the economics of the oil and gas industry," he said.

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