Global ``inventories, up to date, are comfortable,'' Ali al- Naimi said in Riyadh today ahead of an Organization of Petroleum Exporting Countries summit this weekend. ``There are a multitude of factors influencing the price, which we have the least influence on,'' the minister said.
Oil prices fell for a second day after the International Energy Agency cut its 2008 world demand forecast, citing the effect of record prices on consumption in the U.S., Europe and Japan. Crude for December delivery fell 95 cents to $93.67 a barrel on the New York Mercantile Exchange at 2:48 p.m. London time. Oil rose more than 50 percent this year, reaching a record $98.62 last week.
OPEC has little influence on current oil prices, which are high because of ``pessimism'' over supply, al-Naimi said. Global spare capacity is currently at 3 million barrels a day, al-Naimi said, which equals about three-quarters of the production from Iran, OPEC's second-largest producer after Saudi Arabia.
Global oil demand is expected to rise 2.3 percent next year, according to the IEA, which advises 26 oil-consuming nations. The agency's estimate of 87.69 million barrels a day is 300,000 barrels a day less than its previous forecast a month ago. Surging Chinese and Indian demand for oil could create a supply ``crunch'' as soon as 2015, the IEA had said in an annual report last week.
Less Volatility Desired
OPEC will supply as much crude as is needed by the market because the producer group wants to avoid price volatility that hurts economic growth, al-Naimi said.
``We do not wish any country to go through recession,'' he said. ``I believe OPEC is interested in less volatility and less swings in the market.''
The 12-member group decided on Sept. 11 to raise output by 500,000 barrels a day starting from Nov. 1. The increase brought the target output for 10 members, excluding Iraq and Angola, to 27.253 million barrels a day, which is about 118,000 barrels a day higher than its October output, according to Bloomberg estimates.
Sanford C. Bernstein & Co. analysts estimated in a report yesterday that the cost for a marginal, or additional, barrel of world oil supply is now about $60 a barrel, which in turn will keep international prices between $70 and $75 over the next five years.
Saudi Plans
Saudi Arabia's own oil production operating costs are still ``quite low'' at about $2 a barrel, al-Naimi said, even as cost increases from manpower shortages and higher material prices make ongoing projects more expensive.
The kingdom's output capacity plans are on schedule to reach 12.5 million barrels a day in 2009, he said. Saudi Arabia won't increase its capacity beyond this level, until it determines demand warrants more supply, al-Naimi said.
State-owned Saudi Aramco is implementing an expansion plan that will raise output from the Khurais field, the Shaybah field, in the southeastern desert, known as the Empty Quarter, and the Nuayyim field in central Saudi Arabia. The kingdom continues to discover new oil fields, al-Naimi said.
Global demand for hydrocarbons would remain strong even with the development of alternative fuels, which would help meet rising energy needs, al-Naimi said. New technology would make using fossil fuels a cleaner source of energy, he said.
Via: Bloomberg| by Glen Carey in Riyadh, Zainab Fattah & Arif Sharif
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