(MENAFN- Gulf Times) Saudi Arabia, the world's largest oil exporter, is confident that crude prices will rebound with global economic growth boosting demand.
Prices will recover from a slump due to a glut created by a lack of co-operation from producers outside the Organisation of Petroleum Exporting Countries, Saudi Arabia Oil Minister Ali al- Naimi said at a conference in Abu Dhabi. Al-Naimi ended his speech showing the confidence as he jumped off the stage and smiled.
Brent oil tumbled into a bear market this year as the US pumped the most crude in more than three decades and economic growth slowed from China to Germany. The increase in global crude demand was about 700,000 barrels a day this year, below the projected 1.2mn bpd, al-Naimi said.
"The oil market will recover," al-Naimi said. "Fossil fuel will remain the main source of energy for decades to come."
Oil surged from a five-year low at the end of last week after al-Naimi said the slump in prices was temporary. West Texas Intermediate climbed 4.5% to $56.52 a barrel on December 19 and Brent advanced 3.6% to $61.38 a barrel. Yesterday, Brent rose 1.4% and WTI gained 1.3%. Saudi Arabia accounted for about 13% of global oil output last year, BP estimates.
Money managers are the most bullish since August about the rout being over. The net-long position in West Texas Intermediate rose by 26,455 contracts to 217,723 futures and options in the week ended December 16, the most since mid-August, US Commodity Futures Trading Commission data show.
Lower oil prices won't have a major effect on Saudi Arabia's economy, al-Naimi said. Economic growth will expand 4.3% this year and 3.6% next year, according to analyst estimates compiled by Bloomberg.
Lack of co-operation from non-Opec producers and wrong information in the market hit prices, al-Naimi said. Saudi Arabia's oil policy doesn't target other countries, he said. If non-Opec producers were to offer cuts, Opec probably wouldn't follow suit, he said. "If they want to cut they are welcome. We're not going to cut. Certainly Saudi Arabia is not going to cut."
High prices in the past three years and technological developments contributed to increased production, resulting in lower oil prices, al-Naimi said. Brent averaged $100.61 a barrel this year, down from $108.71 in 2013 and $111.68 in 2012.
Output in the US is the highest in three decades as companies split rocks to produce shale oil. Current prices won't stimulate investment in energy in the long run, al-Naimi said. Less efficient oil producers will be affected by low oil prices, he said.
Shale oil costs between $30 to $90 a barrel, al-Naimi said. "The rocks in the earth are not homogeneous, they have some sweet spots, where the oil is easier to get out, and sour spots, where it's more difficult."
Saudi Arabia has 265bn barrels of oil reserves, and will increase refining capacity to 3.3mn bpd by 2017 from 2.1mn barrels in 2014, al-Naimi said. It's also looking to more joint ventures in downstream projects abroad, he said.
The nation wants to become an international hub for climate change and carbon emissions research, he said. Al-Naimi attended UN global warming talks in Lima, Peru, this month.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.