Wednesday, April 21, 2010

Saudi output steady despite rising oil prices

By Amena Bakr
OPEC to mull oil output boost at $100

OPEC may hike output if oil hits $90-$95

DUBAI - Saudi Arabia, the world's top oil exporter, is pumping around 8.05 million barrels per day (bpd) of crude in April, a senior Gulf OPEC delegate said on Wednesday, little changed from March.

The stable production indicates the kingdom has yet to respond with an increase in supply to oil prices that have moved above the $70-to-$80 a barrel mark that OPEC's biggest producer has pegged as fair for consumers and producers.

"April production is 8.05 million bpd," the delegate told Reuters.

In March, Saudi Oil Minister Ali al-Naimi said output was around 8.0-8.1 million bpd.

Buyers of Saudi crude, who are informed on a monthly basis of their supply allocations, said on Wednesday they saw no sign of higher Saudi output and no indication of the kingdom offering extra barrels.

"I don't see any evidence of supply changes," said a source at an international oil major.

A source at a European oil company made similar remarks and said his refineries did not need any extra crude at present in any case, because of limited demand in the region.

Customers of Saudi oil in Europe and Asia said on April 8 their May volumes would be steady from April's, indicating no change in Saudi production.


Benchmark U.S. crude oil traded around $83.50 a barrel on Wednesday, down a few dollars from a high above $87 hit earlier in April, the highest price in 18 months.

The Organization of the Petroleum Exporting Countries has kept its output targets steady for more than a year, but since mid-2009 rising oil prices have encouraged many members to informally raise supply.

But Gulf Arab producers Saudi, Kuwait, the UAE and Qatar have held the line and pumped close to target despite higher prices. Saudi Arabia holds most of the spare capacity that OPEC could use to boost output.

That supply cushion stood at around 4.5 million bpd, the delegate said.

For the core Gulf group, crude has rallied due to optimism that economic recovery would boost oil demand and tighten the market in the future, rather than because of any actual supply shortage.

High global oil inventories, which built up as demand contracted with the global economic downturn, remain an issue of concern for producers.

"The oil price is not related at all to there being a shortage," Qatar's Oil Minister Abdullah al-Attiyah said on Sunday. "Inventory is very comfortable."

OPEC, supplier of more than a third of the world's crude, would consider boosting output if the price topped $100 a barrel, Kuwait's Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said earlier in April.

OPEC delegates have said the group would need to see prices of at least $90 before considering any change in supply.

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