Oil market seen balanced for rest of ’06

DUBAI – World oil markets are expected to remain well balanced for the remainder of 2006 and there are enough crude supplies to meet any unexpected shortage in the market or hike in demand, a senior Opec delegate said yesterday.

The delegate also told Reuters that the Organisation of the Petroleum Exporting Countries (Opec) was unlikely to change its current production levels this year “as things stand”. “The market is not asking for more crude,” he said.”In terms of crude supply, it’s well balanced and there is actually extra in global stocks, which are higher than normal on the crude side.””There is enough oil in the stocks and enough spare capacity to satisfy any unexpected increase in demand or shortage in supply during this year.”The delegate said oil prices were being pushed higher by concern over US gasoline stocks coming into the summer driving season and geopolitical factors such as Iran’s standoff with the West over its nuclear ambitions, rebel attacks that have shut in a quarter of Nigeria’s oil production, as well as Iraq.Oil prices have risen more than 20 per cent since mid-February, reaching US$70 a barrel on Monday for the first time in seven and a half months.”In terms of the crude side, it (the market) is well balanced and it is likely to continue well balanced for the rest of the year,” the delegate said.”Yes, the Nigerian shortage made some distortion to some extent in some refineries, but it is not a global issue.”Nigeria’s light sweet crude is especially favoured by US refiners which are heading into the summer driving season, the period of peak motor fuel demand in the world’s top consumer.Asked if Opec was expected to keep output levels unchanged for the rest of 2006, the delegate said: “As things stand, yes”.The International Energy Agency has said that Opec, which is already pumping oil near capacity, will need to produce more this year than previously expected to meet rising world demand and cover a shortfall from other producers such as Russia.Saudi Arabia holds the lion’s share of the group’s spare capacity and the kingdom, the world’s top exporter and Opec’s biggest, has said there is not enough demand from refiners for the medium and heavy crudes that constitute the bulk of its unused output capacity.- Nampa-Reuters”The market is not asking for more crude,” he said.”In terms of crude supply, it’s well balanced and there is actually extra in global stocks, which are higher than normal on the crude side.””There is enough oil in the stocks and enough spare capacity to satisfy any unexpected increase in demand or shortage in supply during this year.”The delegate said oil prices were being pushed higher by concern over US gasoline stocks coming into the summer driving season and geopolitical factors such as Iran’s standoff with the West over its nuclear ambitions, rebel attacks that have shut in a quarter of Nigeria’s oil production, as well as Iraq.Oil prices have risen more than 20 per cent since mid-February, reaching US$70 a barrel on Monday for the first time in seven and a half months.”In terms of the crude side, it (the market) is well balanced and it is likely to continue well balanced for the rest of the year,” the delegate said.”Yes, the Nigerian shortage made some distortion to some extent in some refineries, but it is not a global issue.”Nigeria’s light sweet crude is especially favoured by US refiners which are heading into the summer driving season, the period of peak motor fuel demand in the world’s top consumer.Asked if Opec was expected to keep output levels unchanged for the rest of 2006, the delegate said: “As things stand, yes”.The International Energy Agency has said that Opec, which is already pumping oil near capacity, will need to produce more this year than previously expected to meet rising world demand and cover a shortfall from other producers such as Russia.Saudi Arabia holds the lion’s share of the group’s spare capacity and the kingdom, the world’s top exporter and Opec’s biggest, has said there is not enough demand from refiners for the medium and heavy crudes that constitute the bulk of its unused output capacity.- Nampa-Reuters