Oil to stay at about $65 for six months, Kuwait Petroleum says

12/8/2014

Oil to stay at about $65 for six months, Kuwait Petroleum says

WAEL MAHDI

MANAMA (Bloomberg) -- Oil prices will stay at about $65/bbl for at least half a year, until OPEC changes its collective production or world economic growth revives, said the head of state-run Kuwait Petroleum Corp.

Oil is trading in a bear market as the U.S. pumps at the fastest rate in more than three decades and global demand expands more slowly. OPEC decided on Nov. 27 to maintain its output target, prompting a drop in European benchmark Brent crude to less than $70/bbl for the first time since May 2010.

"I think oil prices will stay around the current level of $65 for six or seven months until OPEC changes its production policy, or recovery in world economic growth become more clear, or a geopolitical tension arises," Nizar Al-Adsani, KPC’s chief executive officer, said at a conference in Kuwait City.

Crude prices have declined about 40% from a June peak amid overproduction and sluggish growth in consumption. Saudi Arabia (SABIC) led OPEC’s decision to maintain rather than cut output last month in Vienna, citing the threat U.S. shale presents to the group’s market share, Iranian Oil Minister Bijan Namdar Zanganeh said on Nov. 28.

Shared Production

The Organization of Petroleum Exporting Countries pumped 30.56 MMbopd in November, exceeding its target of 30 million for a sixth consecutive month, according to estimates compiled by Bloomberg. U.S. oil production accelerated to 9.08 MMbpd through Nov. 28, according to data from the Energy Information Administration. That’s the fastest rate in weekly records that started in January 1983.

Kuwait is producing 2.9 MMbopd, Al-Adsani said. Together with neighboring Saudi Arabia, Kuwait is pumping 200,000 bopd from the Chevron Corp.-operated Wafra field straddling their border, he said.

It’s still unclear when production will resume at the Khafji oil field in Kuwait’s shared neutral zone with Saudi Arabia, Al-Adsani said. Khafji was producing 300,000 bopd before Saudi Arabia closed it in late October, citing environmental and technical reasons.

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