Newspaper article The Christian Science Monitor

Oil Prices Up as Saudis See Rising Demand, Slowing Supply

Newspaper article The Christian Science Monitor

Oil Prices Up as Saudis See Rising Demand, Slowing Supply

Article excerpt

Optimistic comments from a Saudi official lifted crude oil prices Tuesday, in anticipation of a key Organization of Petroleum Exporting Countries meeting Friday.

Arriving in Vienna, Saudi Arabia's oil minister Ali al-Naimi told reporters Monday that OPEC's strategy of maintaining production is paying off: Demand for oil is increasing while supply slows, Mr. al- Naimi said. Those upbeat comments may confirm that Saudi Arabia, OPEC's leading producer, plans to keep oil output steady at the semi- annual meeting later this week.

"The more al-Naimi talks before the meeting, the less likely there are unexpected changes at the meeting," says David Livingston, an associate in the energy and climate program at the Carnegie Endowment for International Peace, a Washington-based think tank. "The Saudis are committed to policy continuity right now."

US crude prices rose to $61 a barrel after al-Naimi's comments, and Brent, the international benchmark price, rose slightly as well. The uptick is a small but welcome one for an industry left reeling by low prices - the result of too much oil supply and weak demand. Between June and December 2014, the glut of oil led prices to collapse more than 50 percent, tumbling from over $100 a barrel to lower than $50.

Low prices have forced drillers in US shale - where the cost of extraction is higher - to stack rigs and lay off workers. But over the last several months prices have stopped falling, and Tuesday's price was the highest since December 2014. A weakened dollar and increased refinery demand also contributed to Tuesday's price climb.

OPEC last decided to maintain production at its November 2014 meeting, which sent oil prices plunging. Maintaining output at the current rate at the June meeting would mean OPEC's production ceiling would stay at 30 million barrels a day, as part of Saudi Arabia's gambit to keep market share from being gobbled up by US shale producers, Russia, Mexico, and others. …

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