Al-Naimi says global oil supply ample, demand good

SEOUL: Both producers and consumers are happy with current crude oil prices and fundamentals, Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday, adding that given the balance speculators should leave the market alone.
"You know my desire is that people leave the market alone," Al-Naimi told Reuters in an interview in Seoul. "You know why? Because everybody now is happy with where the prices are. Nobody is complaining about high prices or low prices."
"They are no longer skyrocketing or falling down. So I will really leave the market alone."
Brent surged to a high of $128 a barrel in March this year due to supply concerns as tensions between Iran and the West over Tehran's disputed nuclear program escalated, threatening to derail a nascent global economic recovery.
Saudi Arabia, the world's top oil exporter, responded by boosting output to the highest level in decades to over 10 million barrels per day (bpd) in summer.
Higher supplies, along with a weak global economic outlook and a slowdown in China have since brought down prices about 15 percent to near $108 per barrel.
The US benchmark has held steady between $85 and $90 a barrel and Brent between $100 and $110, Al-Naimi said, calling the prices stable. The oil minister had identified $100 a barrel as a suitable price earlier in the year.
The OPEC-member cut output by 230,000 bpd to 9.49 million bpd in November, lowering the producer group's total to 30.78 million bpd, closer to its output target.
Asked if he was concerned about next year's demand growth given the global economic uncertainty, Al-Naimi said: "Mechanisms are working well. Supply is plentiful, demand is good."
On the supply front, he noted high US production along with a recovery in output from Iraq and Libya.
The Organization of the Petroleum Exporting Countries agreed to maintain its oil output target of 30 million bpd at a meeting last Wednesday.
OPEC is relaxed about the prospect of rising inventories in the first half of 2013, the group's secretary general separately said, so long as oil prices avoid extreme moves from current acceptable level. OPEC's own forecasts show demand for the group's oil will average 29.25 million bpd during the period.
Meanwhile, the price of oil pushed towards $88 a barrel yesterday amid hopes that US leaders can reach a budget deal and avoid automatic tax and spending cuts that might dampen growth and crimp demand for crude.
By early afternoon in Europe, benchmark oil for January delivery was up 56 cents at $87.76 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents to close at $87.20 on Monday in New York.
In London, Brent crude, which is used to price international varieties of oil, was up 66 cents to $108.30 on the ICE Futures exchange.
The Nymex contract was also supported by the early 2013 expansion of the Seaway pipeline from 250,000 to 400,000 barrels a day. It transports crude from the key deliver point of Cushing, Oklahoma, to refineries along the Gulf Coast.
The expansion will alleviate "the glut of discounted landlocked crude in the US." analysts at JBC Energy in Vienna said. "Furthermore, it was announced that the pipeline should reach its final designed capacity of 850,000 barrels a day as soon as Q1, 2014 — suggesting that the expansion works are well underway."
Investors will also be monitoring fresh information on US stockpiles of crude and refined products.
Data for the week ending Dec. 14 are expected to show a draw of 2.3 million barrels in crude oil stocks and a build of 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.