OPEC measures will prevent global oil markets getting too tight

18-Mar-10

OPEC will take measures to prevent global oil markets getting too tight, as stated by Saudi Arabia, indicating that it will not withdraw from placing more barrels into the market to suppress runaway oil prices. "We will never allow [the oil market to] get to the point where it puts too much pressure on prices," Saudi Arabia Oil Minister Ali Naimi told journalists ahead of OPEC's Wednesday production policy meeting. US oil prices have topped US$80 a barrel, above the kingdom's preferred range of US$75-80 a barrel marked last year by King Abdullah of Saudi Arabia. Saudi Arabia has spare production capacity of over 4 mln bpd that it could release into world markets to dampen prices. The kingdom has helped rally other OPEC states over the past year around the notion of a preferred price level of between US$70 and US$80 a barrel. Mr. Naimi said healthy demand in places like China, Saudi Arabia's most important growth market, was helping prune the overhang in global unused oil inventory. "China is growing at over 8% ...and things are tightening.” Forward demand cover in developed nations, a measure of the health of supply in the world's biggest oil consumers, such as the US has dropped to around 58 days currently from around 62 days. The norm seen in recent years is around 53 to 55 days.