CAIRO/NEW YORK – Saudi Oil Minister Ali Al-Naimi said demand for crude matches supply and the global market is stable. “This is the best time for the market. The market is functioning well, supply is healthy, demand matches supply and if there is any extra supply, it is helping inventories,” Naimi told reporters in Cairo Friday before tomorrow's meeting of the Organization of Arab Petroleum Exporting Countries (Oapec). “There are customers who will come to every producer and ask for volume,” Naimi said. Asked if Saudi Arabia is willing to return to individual quotas if other OPEC members demand it at a later stage, Naimi said that the Kingdom “will honor the requests of its members.” In Vienna, ministers gave no indication of whether they would do anything to reduce excess production, which runs about 1 million barrels a day over the level of supply OPEC expects the world will need from it next year. This has come as Iraq's oil industry is being rejuvenated with fresh investment from international oil companies, and after Saudi Arabia has maintained the higher levels of production that were designed to help fill a shortfall during Libya's civil war last year. Naimi said that requests for extra crude “reflects what the market needs. My wish is for everyone to leave the market alone.” Opec, a monthly report, said its production in November fell 210,000 barrels per day (bpd) to 30.78 million bpd, according to secondary sources. The report left its forecast for growth in world demand in 2013 unchanged at 770,000 bpd and forecast demand for OPEC crude next year would average 29.7 million bpd – unchanged from last month and down 400,000 bpd from 2012. Oil fell for the first time in six days Friday on concern US lawmakers will fail to reach a deal to avert a fiscal crisis, threatening the economy of the world's biggest crude consumer. In London, Brent dropped $1.45 to a low of $108.75 before recovering slightly to trade around $108.90 by 1442 GMT. Brent has risen by just 1.5 percent so far in 2012, having averaged around $111.70, not far above its 2011 average of $110.91. New York oil futures for February delivery fell as much as $2.17, or 2.4 percent, to $87.96 a barrel. The contract traded at $88.69 a barrel at 10:17 am local time. World oil demand growth looks set to rise in 2013 due to a recovery in the US economy, according to many forecasters. The US budget stalemate had an even bigger impact on US crude futures, which dropped to a low of $87.96, down $2.17 per barrel. “The United States is the dominant factor in the world economy, and if growth falters there, it will affect all the other markets,” said Barbara Lambrecht, commodities analyst at Commerzbank in Frankfurt. “We know 2013 is going to be another tough year for Europe and we all need the support of the US economy,” she added. Analysts are more upbeat on the prospects for the oil market in the New Year, following Chinese data showing higher demand and on expectations of slightly faster global economic growth. Only 11 days are left to prevent automatic tax hikes and spending cuts, referred to as the “fiscal cliff”. — SG/Agencies
