KUWAIT: Oil producing countries plan to stabilize the crude output, and probably trim it, in case the prices failed to “balance” in the markets, according to a Kuwaiti expert.
Affirming that the collectively desired price is in the range of $ 50-60 per barrel, Mohammad Al-Shatti told Kuwaiti News Agency (KUNA) that a number of these countries, during their upcoming meeting in Doha, Qatar, would first seek to firm the production for months, and in case the balance could not be restored, they would slash it.
Oil prices have already recovered, amid various factors related to the world economy and supply and demand, he said, adding that positive reports by the US Federal Reserve diminished concerns about the American and Chinese economies. On demand, Al-Shatti said indications show continuing restoration of the demand in the industrial and developing nations, thus boosting prospects that the glut would be absorbed. As to supplies, those from Iraq are far less than the forecast.
Elaborating, Al-Shatti said overall US output is falling in a steady fashion, though less than predictions, coinciding with decrease of a number of drilling rigs in the US. Moreover, the production in several countries has declined, as compared to 2015.
He was alluding to Canada, Columbia, Brazil, the North Sea, Vietnam, Malaysia and Venezuela. He affirmed that some of the participants in the April 17th meeting in Doha have made positive remarks respect of their serious desire to restore balance to the market in terms of pricing and producing.
They tend, he noted, to stabilize the production for several months, as a preliminary step, and if they find that the balance cannot be restored, they will trim the output, noting that the desired price ranges between $50-60 pb. Aspired balance is forecast to be seen in second half of 2016, along with expected further decline of the American output, start of withdrawing from the reserves, as well as the predicted hike of demand. However, a solid restoration of the market balance cannot be expected before 2017, he cautioned.
Saudi Arabia’s Samref oil refinery said yesterday all its units were fully operational without exceptions, denying a Reuters report that one unit was down. “Regretfully, this news is totally incorrect and the refinery is fully operating including all its units without exceptions,” Samref said in an emailed statement.
Trading sources told Reuters on Friday that a 155,000 barrel per day (bpd) vacuum distillation unit (VDU) was down, triggering a tender issuance to export residual fuels from the port of Yanbu. VDUs are used to produce petroleum products from the heavier oils left over from distillation in oil refineries. Samref on Saudi Arabia’s west coast is a 400,000 barrel per day joint refinery between Saudi state-owned Aramco and US oil major Exxon Mobil.
