BLBG:Oil a ‘Little Bit High,’ Saudi Arabia’s Al-Naimi Says
Saudi Arabia is storing as much as 80 million barrels of crude to boost supplies amid international prices that are “still a little bit high,” according to the country’s oil minister Ali al-Naimi.
Saudi Arabia, the world’s largest oil exporter, has set aside supplies “on shore in Saudi Arabia, in pipelines, in tanks,” al-Naimi said in Tokyo today before board meetings of state-owned Saudi Arabian Oil Co., of which he is chairman.
Brent crude in London, a benchmark price for more than half the world’s oil, rose as much as 20 percent this year, prompting concern among producers and consumers that the global economic recovery may be derailed. While futures have fallen to a three- month low, they are still up 5.8 percent in 2012.
OPEC is “working hard to bring the price down,” Secretary-General Abdalla el-Badri said last week. Saudi Arabia, the Organization of Petroleum Exporting Countries’s biggest producer, is pumping oil at 10 million barrels a day, al-Naimi said April 13 in Seoul. That’s close to the fastest rate in at least 31 years, according to official data.
Spare Capacity
The kingdom still has about 2.5 million barrels a day of spare production capacity, al-Naimi said today. 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.
Saudi Arabia’s “main motivation” for building crude stockpiles is to meet an expected increase in domestic demand for power generation, Goldman Sachs Group Inc. said last month. The country probably added 390,000 barrels a day to world consumption as it boosted inventories by 35.4 million barrels from December to February, according to the bank.
Brent crude for June settlement was at $113.60 a barrel, up 0.4 percent, on the London-based ICE Futures Europe exchange at 12:27 p.m. Singapore time today. It rose as high as $128.40 on March 1 amid concern Western sanctions aimed at halting Iran’s nuclear program would disrupt Middle East supplies.
West Texas Intermediate oil for June delivery was at $97.90 a barrel, down 3 cents, in electronic trading on the New York Mercantile Exchange. WTI has fallen 0.9 percent this year, after climbing as high as $110.55 on March 1.
To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
