JIZAN: Saudi Arabia’s Oil Minister Ali al-Naimi said on Wednesday that oil demand is growing and markets are calm, in some of his first public comments since the price of crude rebounded from a near six-year low.

Oil crashed by 60 per cent between June and January to a post-2009 low of $45 a barrel, with losses accelerating after Opec decided in November to hold output at 30 million barrels per day to try to preserve its market share.

International benchmark Brent has since recovered to around $60 a barrel as energy companies have slashed investments in future production, and as the number of drilling rigs operating in the fast-growing US shale patch has fallen.

“Markets are calm now ... demand is growing,” Naimi said on the sidelines of a conference in the port city of Jizan, southwest Saudi Arabia.

Naimi was the driving force behind Opec’s policy shift at its November meeting, when the group decided not to cut output. He suggested on Wednesday he is satisfied with how the move has played out, saying the market needs a period of stability.

“I don’t like to talk about oil because we want calmness,” Naimi said when questioned by reporters.

“We don’t want anything that creates volatility in the market.”

A senior Gulf Opec delegate said on Tuesday that prices around $60 a barrel are “OK for now”, despite talk from members Nigeria and Ecuador of the possible need for an emergency meeting before the group’s next scheduled gathering in June.

The 12-country group’s decision sent oil prices sinking to levels not expected even by core Gulf Opec producers, who had blocked other members’ call for a cut. But there are signs the strategy of letting prices fall is beginning to take effect.

Earlier this month Opec sharply increased its forecast for demand for its crude this year, in a move some say vindicated the group’s policy. Other Opec members are still struggling with the effects of lower oil prices, however, after growing used to oil averaging more than $100 a barrel between 2011 and 2013.

While many Gulf members are insulated from the price fall by large cash reserves, members including Venezuela, Nigeria and Iraq face a severe budget squeeze. Ecuador’s President Rafael Correa said on Tuesday oil prices are “unnecessarily” low.

At 1036 GMT on Wednesday, Brent crude oil was trading up 28 cents at $58.94 a barrel.

Published in Dawn February 26th , 2015

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