U.A.E. backs OPEC move to halt swing-producer role in oil market

11/29/2014

U.A.E. backs OPEC move to halt swing-producer role in oil market

WAEL MAHDI

ABU DHABI (Bloomberg) -- The United Arab Emirates backs OPEC’s move to not play a so-called swing-producer role as oil prices decline, Energy Minister Suhail Al-Mazrouei said.

“We don’t support to be a swing producer whenever prices fall,” Al-Mazrouei said in a statement on his Twitter account. The “market will dictate the right stable price and we are not targeting or setting a specific price.”

The minister’s remarks came after oil prices plunged below $70 following the 12-nation Organization of Petroleum Exporting Countries’ decision on Nov. 27 to maintain production at 30 MMbopd. OPEC is retreating from its traditional role as a swing producer that influences prices by raising or lowering output to balance the market, Jeff Currie, head of commodities research at Goldman Sachs in New York, said last month.

Al-Mazrouei said he supports the OPEC decision to keep production unchanged because it will benefit customers, the oil market and the global economy.

“We need to allow enough time for market stability, we will not panic,” he said.

A fracing boom has driven U.S. oil output to the highest in three decades, contributing to a global surplus that Venezuela on Nov. 27 estimated at 2 MMbpd, more than the production of five OPEC members.

Demand for the group’s crude will fall every year until 2017 as U.S. supply expands, eroding its share of the global market to the lowest in more than a quarter century, according to the group’s own estimates.

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