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Page added on May 8, 2012

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Oil a ‘Little Bit High,’ Saudi Arabia’s Al-Naimi Says

Saudi Arabia is storing as much as 80 million barrels of crude to boost supplies amid international prices that are “still a little bit high,” according to the country’s oil minister Ali al-Naimi.

The nation, the world’s largest oil exporter, has set aside supplies “on shore in Saudi Arabia, in pipelines, in tanks,” al-Naimi said in Tokyo today before board meetings of state- owned Saudi Arabian Oil Co., of which he is chairman.
Brent crude in London, a benchmark price for more than half the world’s oil, rose as much as 20 percent this year, prompting concern among producers and consumers that the global economic recovery may be derailed. While futures have fallen to a three- month low, they are still up 4.8 percent in 2012.

OPEC is “working hard to bring the price down,” Secretary-General Abdalla el-Badri said last week. Saudi Arabia, the Organization of Petroleum Exporting Countries’s biggest producer, is pumping oil at 10 million barrels a day, al-Naimi said April 13 in Seoul. That’s close to the fastest rate in at least 31 years, according to official data.

The kingdom still has about 2.5 million barrels a day of spare production capacity, al-Naimi said today. It is storing crude “because of the situation in the world,” he said, without elaborating.
Power Generation

Inventories of 80 million barrels are equivalent to less than one day of global consumption, which is forecast by the International Energy Agency at 89.9 million barrels a day this year. The stockpiles “have nothing to do with” the country’s power-generation requirements, al-Naimi said.

Saudi Arabia’s “main motivation” for building crude stockpiles is to meet an expected increase in domestic demand for power output, Goldman Sachs Group Inc. (GS) said in a report April 25. The country probably added 390,000 barrels a day to world consumption as it boosted inventories by 35.4 million barrels from December to February, according to the bank.

Saudi demand for electricity typically gains during the summer months when temperatures rise. More than 50 percent of installed power-plant capacity is idle in the winter, Saleh al- Awaji, the chairman of Saudi Electricity Co. (SECO) said in Singapore on April 17.

Brent crude for June settlement was at $112.54 a barrel, down 0.6 percent, on the London-based ICE Futures Europe exchange at 3:19 p.m. Singapore time today. It rose as high as $128.40 on March 1 amid concern Western sanctions aimed at halting Iran’s nuclear program would disrupt Middle East supplies.

West Texas Intermediate oil for June delivery was at $97.04 a barrel, down 0.9 percent, in electronic trading on the New York Mercantile Exchange. WTI has fallen 1.8 percent this year, after climbing as high as $110.55 on March 1.

Bloomberg



2 Comments on "Oil a ‘Little Bit High,’ Saudi Arabia’s Al-Naimi Says"

  1. BillT on Tue, 8th May 2012 1:51 pm 

    More BS from the oil liars of Saudi Arabia. They have never passed their max of 10 million barrels per day for more than a few days since the 90s. And they still cannot do it. Lies and more lies.

  2. Kenz300 on Tue, 8th May 2012 5:41 pm 

    Internal demand for oil will put Saudi’s export plans at risk going forward. They live in a desert. They need to quit using oil for power generation and move to solar.

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