Cattle Network - 16/5/2006
Saudi Arabian Oil Minister Ali al-Naimi said Monday that global oil supplies are outpacing demand in comments that echo recent concerns that high, $70-a-barrel oil is undermining demand, as consumers conserve and find ways to work around high energy costs.
"There is no lack of capacity right now. Supply is ahead of demand," Naimitold reporters on the sidelines of an energy conference in Amman,Jordan.
Asked about the impact of high prices, al-Naimi said: "In general, when prices are high, people check their pockets and when they are lower, they open them." The comments from Naimi, de facto leader of the Organization of Petroleum Exporting Countries, triggered a selloff in crude oil Monday. U.S. light, sweet crude for June delivery was down $1.46 at $70.60/bbl late morning in London.
Naimi downplayed a report from the International Energy Agency released Friday in which the agency again cut its 2006 global oil demand outlook due to the impact of high energy prices. "The IEA is a reputable organization. It publishes regular updates.
Today, (its report) is denting (demand) and tomorrow it is accelerating," he said. The Paris-based IEA cut its world oil demand outlook by 15%, or 220,000 barrels a day, as consumer around the world, and particularly the U.S. and Asia, conserve and limit their energy consumption.
The agency now sees oil demand rising just 1.25 million b/d, to 84.83 million b/d. This is far below the agency's growth estimate of 1.79 million b/d projected in December. Asked if OPEC would consider changing its production quota when the group meets June 1 in Caracas, Naimi said: "Let us meet in Caracas."
The 11-nation producer group has kept its daily quota unchanged at 28 million b/d day for about 10 months.