Al-Naimi Says Saudi Oil Output Below Target; Stockpiles to Fall

By Christian Schmollinger and Shigeru Sato
April 25 (Bloomberg) -- Saudi Arabia, OPEC’s biggest oil exporter, is producing less crude than its target and global stockpiles are likely to decline, according to Oil Minister Ali al-Naimi.
The country is producing less than 8 million barrels of crude a day, al-Naimi told reporters today in Tokyo, where he is attending a meeting of Asian energy ministers. Stockpiles “will come down eventually,” he said.
U.S. stockpiles have climbed to the highest since September 1990 even as Saudi Arabia leads the Organization of Petroleum Exporting Countries’ efforts to implement a 4.2 million barrel a day reduction in oil output from the group’s September levels. The country is producing 7.79 million barrels a day, less than its target of 8.1 million barrels a day.
OPEC decided against any further output constraints at a March 15 meeting in Vienna on concern that a fourth cut since September risked increasing energy costs amid the global recession. The group will convene again there on May 28.
OPEC needs to monitor the global oil market carefully to determine if it is oversupplied, Qatari Oil Minister Abdullash bin Hamad al-Attiyah told reporters earlier in Tokyo today. The outcome of the group’s next meeting is “very hard to predict,” he said.
Secretary-General Abdalla El-Badri wants OPEC to fully implement supply cuts agreed last year before it discusses any further reductions, Dow Jones Newswires reported yesterday. Still, the group won’t hesitate to take further action if needed at its next meeting, the report cited El-Badri as saying.
Output Targets
OPEC isn’t formally obligated to reach its output targets before announcing new cuts. The group that supplies about 40 percent of the world’s crude oil has completed 83 percent of 4.2 million barrels a day of production curbs agreed last year, according to data last week from the organization.
OPEC’s output averaged 27.395 million barrels a day last month, down 345,000, or 1.2 percent, from February, according to the survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.06 million barrels a day, 215,000 more than their target.
Benchmark oil prices on the New York Mercantile Exchange have slumped 65 percent from a record $147.27 a barrel on July 11 and closed at $51.55 yesterday.
Asked to comment of the on the current oil price, al-Naimi said “it would be nicer if it was higher.” Responding to a question whether crude at $50 a barrel was good for the global economy, the minister said, “Yes, that’s our contribution to the world economy.”
Finance chiefs from the Group of Seven yesterday predicted a “weak” economic recovery will start to take hold in coming months as evidence mounts that the worst of the recession is over. Two months ago the G-7 forecast the “severe downturn” would persist through most of this year.
To contact the reporter on this story: Christian Schmollinger in Tokyo at christian.s@bloomberg.net; Shigeru Sato in Tokyo at ssato10@bloomberg.net; Last Updated: April 25, 2009 08:43 EDT