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28 February 2024

Oil market 'adequately supplied' - UAE oil minister

By Agencies


United Arab Emirates Oil Minister Mohammed Al Hamli said on Tuesday the oil market was "adequately supplied", the latest official to signal that Opec is likely to refrain from boosting output at this week's meeting.

Despite oil prices hitting a succession of record highs above $100 a barrel, Opec ministers are reluctant to step up production for fear of inflating already high US crude inventories as demand ebbs to its seasonal second-quarter low.

"The market is adequately supplied, yes," Hamli told Reuters in the South Korean capital before he flew to Vienna.

Hamli declined to say what action, if any, he believed Opec should take at its meeting on Wednesday, but noted that prices were being driven by a host of reasons beyond the group's control, echoing several of his Opec peers.

"There are so many factors such as (the) weakness of the dollar, geopolitical issues and some bottlenecks in the refinery sector," he said.

As to the meeting he said: "First of all, we have to meet, and then decide. We have to look at the latest data on fundamentals, only then can we decide what to do."

Opec, which pumps more than a third of the world's oil, last met on February 1 when it left output unchanged. It has not agreed a formal increase since September last year, when it decided to raise production by 500,000 barrels from November 1.

Consumers, led by top fuel burner the United States, have urged the Organization of the Petroleum Exporting Countries to produce more oil in an attempt to cool prices and to limit an economic slowdown.

Strong investor demand fuelled by the falling US dollar and fears of quickening inflation has pushed prices steadily higher, with US crude hitting nearly $104 on Monday to stand more than 65 per cent higher than a year ago.

Opec President Chakib Khelil said the group's two options were to keep output steady or to reduce it, although one Opec source said the group could discuss a nominal production increase in an effort to temper bullish market sentiment.

But with US crude oil inventories having risen for seven weeks in a row and gasoline stocks at their highest for 14 years, the group is wary of risking a short-term supply glut that could send prices spiralling lower later this year.

Stocks could rise further during the fall in demand that typically takes place in the second quarter after winter ends, as well as by the impact of a slowdown in the US economy. (Reuters)