Oil tumbled by $1 to $59 a barrel today after the oil ministers of Saudi Arabia and Qatar said OPEC may well keep output unchanged at its March 15 meeting.
Ali al-Naimi, oil minister of the world’s biggest exporter, said in an interview with the Wall Street Journal the oil market was in “much, much better health and balance”.
U.S. crude was down 79 cents at $59.10 a barrel at 1024 GMT, having fallen as low as $59.61. London Brent crude slid 81 cents to $58.20.
“If you are asking me are we going to make additional cuts or increase supply I do not know… But, most probably if the trend is like it is today with the market getting in much, much better balance, there may not be any reason to change,” said Naimi.
The remarks were consistent with comments Naimi made on January 16th, when oil was nearer $51. The Saudi view won immediate backing on Monday from Qatari Oil Minister Abdullah al-Attiyah.
“I agree [with Naimi] 100 percent,” he told reporters. “I am confident OPEC will not change [production]… Below $50 [a barrel] is not good for producers and higher than $60 is not good for consumers,” Attiyah added.
OPEC ministers have been lining up in recent days to say that, barring unforeseen developments, there was no need for further OPEC supply cuts.
The group has already cut 1.7 million barrels per day (bpd) – six percent of OPEC supplies – in two stages on November 1st and February 1st.
The curbs and recent onset of cold weather in top consumer the United States have lifted oil back towards $60 from a 20-month low under $50 in mid-January.
Some investors had expected OPEC to trim production again on March 15th to counter weaker demand in the second quarter as the northern hemisphere winter ends.
“Now [Naimi] has suggested that OPEC might not cut production, investors believe the market will be strongly oversupplied again in the second quarter.” said Dariusz Kowalczyk, chief strategist at CFC Seymour Ltd.
OPEC’s research head Hasan Qabazard told reporters at a London conference he saw potential for 300,000 barrels per day of oversupply in the second quarter.
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