Saudi Won't Dump Oil On Market, OPEC Sees Weak Demand

PARIS, April 10, 2008 (Dow Jones Newswires)

Oil Minister Ali Naimi said Thursday Saudi Arabia won't put extra crude onto the market to take advantage of high prices as the Organization of Petroleum Exporting Countries' data head warned its monthly oil market report due Tuesday would show weaker-than-expected demand.

"I'm not going to dump oil into the market," Naimi told reporters at a Petrostrategies oil summit in Paris.

"If there are buyers, then we will sell him more oil," Naimi said. "From my perspective, I believe the market is well supplied. Inventories are building...the world is producing more oil than is being consumed."

Saudi Arabia is OPEC's largest producer.

Oil in New York Wednesday hit a fresh record high of $112.21 a barrel, helped there by U.S. oil inventories data showing unexpected falls in crude and product stocks.

Global oil demand is weakening, and OPEC's customers aren't asking for more crude, the group's head of research, Hassan Qabazard, said on the sidelines of the same event.

"We sell oil to customers who ask for it and there are no customers asking for it...why should we increase production? There has not been any increase in demand and in fact it's falling," Qabazard told reporters, adding that the data was contained in the 13-member producer group's next monthly oil market report due Tuesday.

He said inventories cover is adequate and remained above the five-year average.

Nobuo Tanaka, the executive director of consuming nations' energy watchdog the International Energy Agency, continued to sound the alarm over data transparency and investment.

Speaking at the same conference as Naimi, he said current oil prices were too high and "a lack of (data) transparency aggravates volatility."

He reiterated the agency's long-held view too little spare oil-producing capacity, insufficient inventories cover, subsidies, and a mismatch in refining capacity are among the factors behind such high oil prices.

In its most recent monthly oil market report, the IEA said that world oil supply in February climbed to 87.5 million barrels a day, with demand in the first three months of this year averaging 88 million barrels a day. A new report from the IEA is due Friday.

Earlier in Beijing, Qatari Oil Minister Abdullah bin Hamad Al Attiyah said OPEC is unable to influence current record high oil prices.

"Inventories are at the highest level in five years," he said. "OPEC always concentrates on physical oil, (and) not in (response to) a false market created by speculation ... we feel very strongly that there is no shortage in supply in the market," he said.

PARIS, April 10, 2008 (Dow Jones Newswires)