Saudi minister calls current oil market ‘best environment’

Ali Al- Naimi, Saudi Arabia's minister of petroleum and mineral resources (AP file photo/Osama Faisal)

By Jonathan Tirone and Lananh Nguyen
 Bloomberg News

Saudi Arabia, the world’s largest crude exporter, is content with current conditions in the oil market, the kingdom’s petroleum minister said three days before OPEC members meet to assess the group’s output policy.

“This is the best environment for the market,” Ali al-Naimi told reporters today in Vienna when asked about the balance of supply and demand.

“Demand is great,” al-Naimi said as he arrived at his hotel.

US crude: Global oil boom forcing Saudi Arabia to cut production

The 12-member Organization of Petroleum Exporting Countries will review its collective production target on May 31 at the group’s headquarters in the Austrian capital. OPEC, which supplies about 40 percent of the world’s oil, kept its official output ceiling unchanged at 30 million barrels a day the last time it met, in December.

Global demand is forecast to rise 800,000 barrels a day to 89.7 million barrels a day this year, requiring 29.8 million of supply from OPEC, the organization said in its monthly oil market report on May 10. It warned that a stalling economic recovery in the euro area and a slowdown in Russia and parts of Asia may temper consumption.

The OPEC basket price for crude, representing members’ export grades, fell below $100 a barrel on April 15, for the first time since July 2012. It has traded either side of that level in recent weeks and was last at $99.56 yesterday. North Sea Brent crude, used to price more than half of the world’s oil, dropped 6 percent this year to trade today at about $104.50 a barrel on the ICE Futures Europe exchange in London.

April Increase

The United Arab Emirates sees current crude prices as “suitable and fair” and not damaging to consumers, Suhail Mohammed Al Mazrouei, the nation’s energy minister, told the U.A.E.’s official WAM news agency yesterday.

OPEC pumped 30.7 million barrels a day of crude in April, up 0.7 percent from 30.49 million in March, according to a report from the Paris-based International Energy Agency published May 14. Data compiled by Bloomberg show that Saudi Arabia, the U.A.E. and other OPEC members produced 30.9 million barrels a day in April, the highest output since November.

“Given the present price level as well as the outlook for crude market fundamentals for the second half, we expect Friday’s OPEC meeting to be rather uneventful, with the producer group likely to keep its current output target whilst continuing to verbally support the $100 level,” David Wech, an analyst at JBC Energy GmbH in Vienna, said today in an e-mailed note.

Saudi Aramco: Saudi oil company set production record in 2012

OPEC is likely to keep its collective production target unchanged this week, according to two delegates from different OPEC nations, who asked not to be identified because the decision isn’t final yet.

The group’s collective production target is “working beautifully,” and there is no need to publicize individual national limits on May 31, Abdalla El-Badri, OPEC’s secretary general, said on April 4.

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