Persian Gulf Oil Producers See Prices Rising After Summer Demand Lull Ends
Kuwait, June 3 (Bloomberg) -- Persian Gulf oil producers,
accounting for 50 percent of OPEC's output, said the 13 percent
decline in prices since May 5 is temporary and oil will rise
again once the summer lull in demand is over.
A slump in demand from refiners has caused oil prices to
fall by more than $2 a barrel since May 5 to hit a two-month low
of $14.55 on Tuesday. Prices had risen from March until May on
anticipation that supplies will be restricted in the future after
the Organization of Petroleum Exporting Countries' and four other
producers pledged to reduce world output by more than 5 million
barrels a day.
''It's summer time! We are just happy that prices are
holding at $14-$15 a barrel,'' Talal al-Yacout, a spokesman for
Kuwait's oil ministry said. ''Our minister is optimistic prices
will pick up again after the summer,'' provided producers comply
with their promised output cuts, he said.
Oil demand typically weakens in the northern summer when the
need for heating oil is at a minimum and refiners have normally
built stockpiles of gasoline in preparation for increased driving
during the summer months.
This year, spring demand for crude has been curtailed
because prices of refined products such as gasoil have risen more
slowly than those of crude, prompting refiners to cut purchases
of crude as profit margins have slimmed.
European refiners' profit from making a barrel of gasoil, or
heating oil, from a barrel of crude oil fell to 59 cents on
Thursday, the lowest return since oil futures began trading in
London in 1988. The one-year average is $2.50 a barrel.
Crude oil for July delivery recovered slightly in London
yesterday to close at $14.88 a barrel on London's International
Petroleum Exchange, still well below the high of $17.05 reached
earlier this month.
Saudi Arabia
Saudi Arabia, the world's biggest oil producer is confident
that oil prices will improve. ''The fundamentals are still
sound,'' said a spokesman for the Saudi oil ministry, and added,
that ''we are determined to do whatever is needed to improve
prices.''
OPEC, which pledged to reduce world output by 4.3 million
barrels a day in a series of agreements stretching back to April
1998, made 91 percent of their promised oil output cuts in May as
they implemented a plan to eliminate an oil glut and boost
prices, according to a Bloomberg survey.
Production from all 11 members of OPEC totaled 25.96 million
barrels a day in May, down 370,000 barrels from a revised 26.33
million barrels a day in April, the survey of producers, oil
companies and analysts showed.
The U.A.E.'s oil minister Obeid bin Seif al-Nasseri said he
expected the market to improve in the ''near future,'' reported
the Saudi-owned Al-Hayat newspaper. ''The easing of the economic
crisis in Southeast Asia will lead to an improvement in demand,''
he said.
Persian Gulf oil producers have set a target range for oil
prices at between $18 and $20 a barrel for Brent crude, the
benchmark grade traded on the IPE.
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