Saudi oil minister says crude market balanced as OPEC seen keeping target
BY GRANT SMITH, MAHER CHMAYTELLI and WAEL MAHDI
VIENNA, Austria (Bloomberg) -- Saudi Arabian Oil Minister Ali al-Naimi said the global oil market is “in equilibrium” in the run-up to an OPEC meeting tomorrow at which the producer group’s members are expected to keep its output target unchanged.
Demand for crude from the Organization of Petroleum Exporting Countries will remain near current levels in 2014, so ministers meeting in Vienna will probably stick with a 30 million-barrel-a-day ceiling, said three delegates who spoke on condition of anonymity because discussions are private. Saudi Arabia pumps almost a third of OPEC’s oil.
Rising output from outside OPEC will trim the amount of crude required from members next year to 29.6 million barrels a day from 29.9 million in 2013, according to a Nov. 12 forecast from the group’s secretariat. OPEC pumped 30.007 million barrels a day in November, based on Bloomberg estimates, exceeding the official target amid output disruptions in member states Iraq, Libya and Iran. The group supplies about 40 percent of the world’s oil.
“The market is in the best condition it can be,” al-Naimi said as he arrived at his hotel yesterday in Vienna. “Everybody is going to supply what they can to satisfy demand.”
The three delegates spoke to Bloomberg before al-Naimi arrived. A Bloomberg survey last week showed 22 out of 24 analysts and traders expect OPEC to keep its target unchanged.
Al-Naimi said the return of supply from Iran and Iraq wouldn’t necessarily prompt a subsequent OPEC output cut.
“Why cut production?” he said in response to a question. “Demand is there.” Al-Naimi didn’t offer an opinion as to what OPEC would decide about its output target.
The Centre for Global Energy Studies in London and Citigroup Inc. in New York have forecast that the kingdom and its allies Kuwait, Qatar and the United Arab Emirates would have to reduce production by 1 million to 2 million barrels a day in 2014 to prevent a glut and keep prices stable.
Demand for OPEC crude will decline by about 900,000 barrels a day in 2014 as the U.S. pumps the most in almost a quarter century, the International Energy Agency has said.
Brent crude, the international benchmark grade, has risen just 38 cents this year to trade at $111.49 a barrel at 7:43 a.m. today in London on the ICE Futures Europe exchange. It has averaged $108.56 since the start of the year, little changed from $111.68 in 2012 and $110.85 in 2011.
“The market is doing well for the past two years, price is doing well, supply and demand in equilibrium, inventories are in the right position,” al-Naimi said.