(MENAFN- Gulf Times) Oil oversupply that sent prices to a five- year low probably will persist until at least the second half when demand is set to
recover, according to Kuwait's oil minister and the Opec governor of the UAE.
Faster global economic growth will be needed to help absorb the oil surplus estimated at 1.8mn bpd, Kuwait Oil Minister Ali al-
Omair told reporters in parliament on Tuesday. A demand-led recovery is seen in the second half, the UAE's Governor to Opec Ali
al-Yabhouni told reporters in Abu Dhabi.
Oil fell about 40% since the Organisation of Petroleum Exporting Countries maintained its production target at a November 27
meeting, seeking to defend market share rather than prices. The UAE and Kuwait are Opec members. Slowing economic growth
contributed to lower prices, al-Omair said.
"We are expecting that this situation will continue until the surplus oil is absorbed and the world economy improves," al-Omair
said. "Forecasts indicate that this will not happen before the second half."
Opec produced 30.2mn bpd of oil in December, down from 30.36mn barrels in November, data compiled by Bloomberg show. China's
gross domestic product climbed 7.4% last year, the slowest expansion since 1990, according to economist estimates compiled by
Bloomberg.
Demand for oil is seen rising in China and elsewhere in Asia, UAE Energy Minister Suhail al-Mazrouei said in Abu Dhabi on
Tuesday. It is shale oversupply that needs to be corrected, and Opec will stand by its decision not to cut its crude output, he
said.
Crude tumbled into a bear market last year as oil extraction soared at shale formations in Texas and North Dakota in the US
Drilling activity has now slowed to in "core US shale regions," Norbert Ruecker, head of commodity research at Julius Baer Group
Ltd, said in an e-mailed note.
"We are watching the movement of oil price and indeed it has reached a level that even experts did not expect," Kuwait's al-Omair
said. Opec isn't planning any meetings before its scheduled gathering in June, he said. "This is OK because even if we now cut
some of our production it will not be more than the surplus which is existing in the market."
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