‘OIL SUPPLY, DEMAND NOW IN BALANCE’
Global inventories declining and helping prices to improve, says Aramco CEO
DHAHRAN (Saudi Arabia)
GLOBAL crude inventories are declining and supply and demand are in balance, according to the head of Saudi Arabian Co (Aramco), while the United Arab Emirates (UAE) energy minister said United States shale oil doesn’t threaten the Organisation of Petroleum Exporting Countries’ (Opec) efforts to support the market.
Demand for crude is continuing to rise and oil inventories are returning to the levels of the past five years, Aramco chief executive officer Amin Nasser said on Sunday here.
“This is helping prices improve,” he said, as Opec and allied suppliers prepared to gather this week in Vienna to assess the market.
UAE Energy Minister Suhail Al Mazrouei said he is optimistic the producers will extend their deal on output cuts when they meet on Thursday.
Shale oil represents only a fraction of global production and “is not an enemy to Opec”, he said in Abu Dhabi, referring to the US output that contributed to a worldwide glut.
Opec and Russia have outlined a deal to extend their oil production limits to the end of next year, though both sides are still working out crucial details, according to people involved in the conversations.
The cuts, which took effect in January, will expire in March unless Opec and its fellow producers extend the accord.
Participants in the deal collectively pump 60 per cent of the world’s oil.
“The balance between supply and demand is very good. What we are seeing today is that prices are in continuous improvement,” said Nasser.
Benchmark Brent crude has gained 12 per cent this year and was trading in London at US$63.82 (RM262) a barrel.
Oil markets are on track to come into balance next year, Al Mazrouei said.
The UAE, which takes over Opec’s rotating presidency for next year, will seek to ensure that members adhere to any decision on cuts that they may agree to at their meeting in Vienna, he said.
The US produced about 8.9 million barrels a day of crude, nearly half of it from shale, last year, according to Energy Information Administration data.
By contrast, Opec pumped 32.6 million barrels a day last month, according to data compiled by Bloomberg. Bloomberg