SAUDI ARABIA. Crude prices should fall because global supply is outweighing demand, according to Saudi Arabia’s oil minister, Ali al-Naimi.
“We want a lower price than where it is now,” al-Naimi said in Adelaide today. “We need to get the price to a level of around US$100” a barrel for London’s Brent crude, he said. Saudi Arabia is the world’s biggest oil exporter.
Brent, a benchmark price for more than half the world’s crude, has dropped 6 percent this month amid concern Europe’s debt crisis will worsen and curb fuel demand. OPEC is working to bring prices down, the group’s Secretary-General, Abdalla el- Badri, said May 3.
The producer group, scheduled to meet next month, is pumping 8.3% more crude than it considers necessary this quarter, figures from the Vienna-based group show.
Brent crude for June settlement dropped 0.8% in the week to May 11 to US$112.26 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate oil for June delivery slid 2.4% to US$96.13 a barrel.
Oil supply outweighs demand by 1.3 million to 1.5 million barrels a day, al-Naimi said today. Demand may rebound in the second half of 2012, he said.
Saudi Arabia increased output last month to the highest in more than three decades, according to data it provided to OPEC. The kingdom pumped 10.1 million barrels a day in April, about 200,000 barrels more than the previous month, the group said in a May 10 report. That’s the highest level since at least 1980, figures from the U.S. Energy Department show.
The kingdom is storing as much as 80 million barrels of crude, according to al-Naimi. It has set aside supplies “on shore in Saudi Arabia, in pipelines, in tanks,” he said in Tokyo last week.
Saudi Arabia still has about 2.5 million barrels a day of spare production capacity, al-Naimi said May 8. It is storing crude “because of the situation in the world,” he said, without elaborating.
Inventories of 80 million barrels are equivalent to less than one day of global consumption, which is forecast by the International Energy Agency at 89.9 million barrels a day this year.