Saudi oil chief says market is 'well balanced'

OIL TALKS: Saudi Arabia's oil minister said the market was well balanced and inventories were healthy, ahead of Tuesday's OPEC meeting. (Getty Images)

Saudi Arabian Oil Minister Ali al-Naimi said on Tuesday that oil markets were fairly well-balanced and inventories were healthy.

"The market is fairly well balanced and we have worked very hard since the June meeting to bring prices to where they are now. I think we have been very successful," he told reporters on arrival in the Austrian capital for a meeting of oil producer cartel OPEC later in the day.

The group is expected to maintain its current production ceiling but some ministers may call for informal curbs by members who are pumping more than their target levels.

"I think everything is in balance - inventories are in a healthy position," Naimi said in his first public comments since early July, when he blamed speculators for driving prices to a record high above $145 a barrel.

"We have customers and we will satisfy demand. Whatever the customers want, we will satisfy," he added, reiterating long-standing Saudi policy to match production to demand.

Oil <CLc1> fell more than $1 a barrel in early Tuesday trade as the dollar rallied against the yen and the euro and on growing expectations that OPEC would not officially cut output in order to stem a near 30 percent slump since July's record high.

Naimi declined to comment on current production levels, referring reporters to the JODI database for the latest data. The database maintained by the Joint Oil Data Initiative shows Saudi production at 9.47 million barrels per day (bpd) in July, short of the 9.7 million bpd it had pledged to pump that month.

Also on Tuesday a senior OPEC source close to Gulf countries was quoted in the Saudi-owned daily al-Hayat as saying that cutting output ahead of the peak winter demand would be "unjustified".

"The current price is close to a level that reflects market fundamentals in terms of supply and demand, which indicate levels of $90 to $100 a barrel," the unidentified source added, providing a rare hint of where the group's powerful Gulf members may see fair value for the price of crude oil.

Although OPEC ministers on Monday expressed concern about swelling supplies and weaker demand that they fear could trigger an even deeper sell-off, they have also been aided by the growing purchasing power of their dollar-denominated oil sales.

OPEC's Ministerial Monitoring Committee, which met late on Monday, would recommend compliance with existing output targets to the plenary session on Tuesday, a delegate told Reuters. But that would leave the group considerable scope to reduce actual production, which is running beyond formal limits.

OPEC meets again in December in Algeria. (Reuters)

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