World oil prices nudged higher Tuesday as OPEC producers met to discuss a possible freeze to crude output levels in a bid to tackle a supply glut.
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Oil production in Saudi Arabia amounted to 10.23 million barrels per day in January, according to the latest report of OPEC.
“The fact is that demand was and remains strong”, he said.
Oil prices dipped in Asia Tuesday after mounting a strong rally the day before as traders remain doubtful that talks on an output freeze among key crude producers will lead to agreement.
“The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate”, Naimi said.
“Saudi Arabia is going to continue pumping – that’s the bottom line”, said Tariq Zahir, managing member of Tyche Capital Advisors in Laurel Hollow, New York.
Just a day earlier, oil prices surged after the International Energy Agency predicted that oil supply and demand would balance next year because of a steep drop in new drilling, especially in the US. He did not specifically address the issue of Iran, which is the biggest obstacle to a global deal as it focuses on ramping up output after sanctions were lifted. The February 16 agreement reached in Doha will be implemented by major oil exporters, Al-Naimi said.
He said the country can “coexist” with other producers but also said that “inefficient and uneconomic producers will have to get out”.
US West Texas Intermediate (WTI) crude futures were trading at $31.12 per barrel at 0354 GMT, down 2.35 per cent from their last settlement. “What’s sent the oil price down is dismissal of rumours there could be a production cut after the freeze, that’s not going to happen”, Spencer Welch, director at IHS Energy told City A.M.
Iran and Iraq, the only two countries that are set to significantly ramp up their output in coming months, have said they still intend to increase production to regain lost market share.
In London, Brent North Sea crude for April, the European benchmark for crude oil, finished the session at $33.27 a barrel, down $1.42 (4.1 percent) from Monday’s settlement. “I welcome new, additional supplies, including shale oil”.
The freeze idea, floated last week by Saudi Arabia, Russia, Venezuela and Qatar, faces uncertain prospects.
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“We have not declared war on shale or on production from any given company or country, contrary to all the rumors that you hear and see”, he said. Prices that hovered over $US100 per barrel for years encouraged inefficient producers to grow output, and those barrels will have to leave the market first, he said.
