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Saudi oil output in May down at 9.05 mbpd: Opec delegate

(Reuters) / 14 June 2006

DUBAI Saudi Arabia's oil production fell to 9.05 million barrels per day (bpd) in May from 9.1 million bpd in April in line with lower customer demand for heavy Saudi crude, a senior Opec delegate said yesterday.

 'There is less call for oil from Saudi Arabia and other countries,' the delegate told Reuters. 'Whatever customers want, Saudi Arabia will give them, unless they ask for ultra or super light crude, which is already allocated (in direct contracts).'

He did not give an estimate for June or say how much the  world's top oil exporter will pump in July, but said demand from refiners for crude was likely to rise in the second half of the year.

The International Energy Agency (IEA) yesterday put Saudi oil production in May at 9.35 million bpd. A Reuters survey of industry and Opec sources estimated Saudi output in May at 9.18 million bpd.

The Opec delegate said customers were asking for less crude volumes because there were abundant commercial stocks and many refineries were closed for routine maintenance.

'Demand for Saudi oil has been going down for two reasons. There are high stock levels and some companies even are saying they have no place to store oil,' he said.

'There is also the problem of mismatching in terms of the crude Saudi Arabia produces and what refineries can take. In addition, refineries are going through maintenance.'

The delegate said an estimated 2-3 million bpd of refining capacity was offline. There is a lack of sophisticated refineries able to run heavy crude, including Arabian Heavy.

'Normally, things start changing in the second half,' the delegate said.

Naimi: On Monday, trade sources said Saudi Arabia kept July crude supplies steady to most of its customers in Asia and Europe.     They said supplies have been steady since March when the kingdom's output rose to 9.45 million bpd, up 50,000 bpd from February levels.

Saudi Oil Minister Ali al-Naimi told the Wall Street Journal this month that Riyadh pumped only 9.1 million bpd in April due to a drop in refinery demand, implying it has more spare capacity to deal with peak summer demand or meet unexpected outages.

Naimi denied the kingdom was easing up on production because of concern about a build-up of inventories in the United States and other importing countries, suggesting producers will sell all the oil they can at current prices near $70 a barrel.

 
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