Oil market ‘balanced’: Saudi oil minister

TOP SAUDI oil officials last week claimed the oil market was “balanced” and there was no concern over crude supply during the upcoming winter months.

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By  Jackson Bruce Published  December 4, 2005

TOP SAUDI oil officials last week claimed the oil market was “balanced” and there was no concern over crude supply during the upcoming winter months. “The market is beautiful, it is in balance and inventories are at a very comfortable level,” said Ali Al Naimi, Saudi Arabia’s oil minister. “Supply is a little bit more than demand, the inventory is comfortable for the consuming countries and the prices have started to stabilise,” he added at the Gulf-European Union oil and gas technologies conference. The Organisation of Petroleum Exporting Countries (Opec) are set to meet in Kuwait on December 12. However, Naimi said it was too early predict what action the cartel would take, but added that the group would “take a decision based on this comfortable (market) situation.” After a recent meeting of Gulf Arab oil ministers in Riyadh, Naimi had said Opec was not thinking of cutting output levels at its next meeting despite a recent fall in oil prices. And Sheikh Ahmad Al Fahd Al Sabah, the Opec president who is also Kuwait’s energy minister, said there was no need for a production cut, describing oil prices as very reasonable. Naimi said he was not worried about supply during the winter. “We have put 2 million barrels per day (bpd) on the table and it has not been picked up. So that is available in the market if need be.” Opec producers have been pumping at top rates for months now. In September, the group offered its spare output capacity, the majority of which is held by Saudi Arabia, from October 1 for three months to try to calm prices that hit a record high of over US$70 in August. Asked if Opec would consider rolling over the offer of spare capacity if the market needed it, Naimi said: “We have to meet and look at the data ahead of us and then decide accordingly.” The United Arab Emirates’ oil minister said at the weekend that Opec might consider a roll-over if markets call for it. However, Abdullah Al Attiyah, Qatar’s oil minister hit back by saying that he saw no reason why the cartel should extend its offer, citing the large amounts of oil now in transit as an example. “The panic has cooled down and we have to look at the second quarter,” said Attiyah. “My concern is with the second quarter,” he added. Opec ministers have said there have been no takers for their offer. Refiners have to date shown little interest in taking more crude oil as they are already operating close to full capacity. Naimi also said that oil prices were slightly high in some consumer countries because of taxes. “Our [Opec] impact is less than 30% in that price. The biggest chunk of that price to the consumer is the tax and that’s the one we should look at,” he said.

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