Kuwait Oil Minister sees crude recovering further in second half
WAEL MAHDI and FIONA MACDONALD
KUWAIT CITY (Bloomberg) -- The surplus in global crude supply is less than the 1.8 MMbopd Kuwait estimated it to be last month, and prices will continue to recoup losses, Oil Minister Ali Al-Omair said.
“We were expecting oil prices to recover in the second half, but they recovered faster than what we expected,” Al- Omair said at an industry conference in Kuwait City. “I expect oil prices to keep improving.”
Brent crude futures, a benchmark for more than half of the world’s oil, gained 6.3% in London this year, after plunging 48% in 2014. The contract rose as much as 80 cents in trading Monday and was at $60.88/bbl at 9:18 a.m. on the ICE Futures Europe exchange.
Rising U.S. supply is contributing to a worldwide crude surplus. Qatar and the United Arab Emirates, OPEC members like Kuwait, estimated the excess at 2 MMbopd, while the producer group’s Secretary-General Abdalla El-Badri said Jan. 26 the surplus was 1.5 MMbopd. The Organization of Petroleum Exporting Countries, which supplies about 40% of the world’s oil, decided not to cut output in November, leaving more expensive operators to reduce supply.
Kuwait, OPEC’s third-largest producer in January, according to data compiled by Bloomberg, has discovered new oil deposits and is appraising its reserves, Al-Omair said. The Persian Gulf country had “positive” discussions Sunday with neighboring Saudi Arabia on their joint operations in the Neutral Zone, a border area where they’re jointly developing oil fields, he said.
Production at the shared Wafra fields, where a Chevron unit is the operator, has dropped 20% since October, two people with knowledge of the matter said Feb. 9. Kuwait stopped issuing work permits for Saudi Chevron employees at Wafra because Kuwait’s ministry of labor and social affairs halted services to the company, three people with knowledge of the matter said Oct. 28. The development coincided with a shutdown of the shared Khafji offshore fields on Oct. 16.
