Global crude consumption is strengthening, and prices will stiffen as demand matches supply, a senior adviser to Saudi Arabia’s oil minister said.
Prices have stopped falling at about $60 a barrel as expanding demand helps contain the global glut, Ibrahim Al-Muhanna said at a conference in Doha, Qatar. It’s too early to say if the Organization of Petroleum Exporting Countries, which kept output unchanged in November, will alter policy when it gathers again on June 5, he said.
“I am confident that demand is and will be stronger,” said Al-Muhanna, adviser to Saudi Oil Minister Ali Al-Naimi. “Supply will remain healthy, and the price will firm up.”
Saudi Arabia, the world’s biggest crude exporter, pledged to supply as much oil as its customers need and doesn’t anticipate any weakening in that demand.
The country won’t cut output unless customers refuse to buy its crude, Oil Minister Ali Al-Naimi said in Berlin on Wednesday. That’s unlikely to happen because it is the world’s most reliable supplier, he said.
Oil fell after the first monthly gain since June as Saudi Arabia stepped up production, lifting OPEC’s output beyond its collective quota for a ninth month.
Futures decreased as much as 1.4% in New York. The Organization of Petroleum Exporting Countries pumped 30.6 million barrels a day in February, according to a survey.
Oil sank almost 50% in 2014 as Saudi Arabia led the group’s decision in November to maintain its output target at 30 million a day, exacerbating a global glut.
West Texas Intermediate’s discount to European prices settled at the widest in more than a year on Feb. 27 as US crude stockpiles expanded to the highest level in weekly data that started August 1982.
The oversupply has driven US drillers to cut the number of rigs in service for a 12th week to the fewest since June 2011, Baker Hughes Inc. data showed.
Saudi Arabia won’t balance global crude markets on its own even as prices fall “too low for everybody” and threaten the investment needed to meet long-term demand, the head of Saudi Arabian Oil Co. said.
The world’s biggest oil exporter, Saudi Arabia has the most spare capacity in OPEC and has historically played the role of swing producer, cutting its output to raise prices and pumping more barrels to lower them.
Oil prices have dropped 55% in the past year as rising production from the US and Russia helped global output exceed demand.
Oil fell to the lowest level in almost six years as signs that Saudi Arabia’s new king will maintain its production policy and rising US crude stockpiles bolstered speculation that a global glut will persist.
Futures dropped as much as 2.7% in New York, extending a 6.4% slide last week. King Salman Bin Abdulaziz, who took over after the death of King Abdullah on January 23, pledged to maintain the policies of his predecessor in a speech on Saudi national television.
US inventories climbed to 383.5 million barrels last month, the highest level for December since 1930, the American Petroleum Institute reported.
Oil fell to the lowest in almost six years on speculation the death of King Abdullah of Saudi Arabia won’t signal any change in strategy for the world’s largest crude exporter.
US benchmark oil futures slid 1.6%t, reversing an initial gain of as much as 3.1%.
Salman Bin Abdulaziz Al Saud, who succeeds Abdullah on the throne, said he would maintain his predecessor’s policies.
Oil jumped after the death of King Abdullah of Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries.
Futures rallied as much as 3.1% in New York and 2.6% in London after the Saudi royal court announced the death in a statement.
Crown Prince Salman bin Abdulaziz will succeed Abdullah on the throne.
Saudi Arabia is delaying by eight years its target to complete a $109 billion clean-energy program, saying it needs more time to assess what technologies it will use.
The project was originally intended to produce a third of the nation’s electricity from solar panels by 2032 and more power from wind, geothermal and nuclear reactors.
The ambition was to save more crude oil for export.
Oil was steady as analysts said a supply glut that’s driven prices to the lowest level in more than five years will linger through the first half of 2015.
Crude has dropped by more than half since June as US output surged and the Organization of Petroleum Exporting Countries decided to maintain its production ceiling.
Saudi Arabia won’t cut its output, though producers outside the group are welcome to do so, Ali Al-Naimi, that country’s oil minister, said at a conference in Abu Dhabi last month.
Saudi Arabia, the world’s largest oil exporter, will keep a “solid will” and maintain the nation’s stability even with falling crude prices, King Abdullah said in a speech read by his crown prince.
Saudi Arabia will enjoy “safety and stability,” according to a copy of the king’s speech read by Crown Prince Salman Bin Abdulaziz with Abdullah in the hospital for pneumonia.
Crude oil is poised to extend the biggest slump in more than two years after Saudi Arabia signaled it’s ready for a price war with other OPEC members, according to Commerzbank AG and Citigroup Inc.
Saudi Aramco, the state-run oil producer of the world’s biggest exporter, cut prices on Oct. 1 for all its exports, reducing those for Asia to the lowest level since 2008.
