Oil above US$60 as Saudi Arabia sees steady market

[LONDON] Brent crude oil steadied above US$60 a barrel on Wednesday after Saudi Arabia's oil minister said he expected the oil market to balance itself.

Oil Minister Ali al-Naimi said he hoped and expected the oil market to balance and prices, which hit a nearly six-year low around US$45 in January, to stabilise, adding to signs Opec's largest exporter is confident that demand is growing. "I hope and expect supply and demand to balance and for prices to stabilise," Mr Naimi said in a speech in Berlin. "Global economic growth seems more robust."

Opec decided not to cut output last year and let prices fall as it moved to defend its share of the market against fast-growing US shale output. Mr Naimi said it was not Saudi Arabia's responsibility to "subsidise" higher cost oil producers.

The speech followed news that Saudi Arabia had raised its official selling prices (OSPs) for oil deliveries to Asia and the United States on Tuesday. "This is a sign that prices have bottomed out because it means Saudi is confident in raising prices without being afraid of losing market share," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

April Brent was down 42 cents at US$60.60 by 1200 GMT, after rising 2.5 per cent on Tuesday. US crude futures were up 23 cents to US$50.75 a barrel, narrowing their discount to Brent to less than US$10 a barrel.

Air strikes on oil terminals in Libya on Tuesday helped to underpin prices, further threatening supplies from the Opec member that have been slashed by ongoing fighting across the country.

Islamist militants, who have gained ground during the turmoil, on Tuesday took over Libya's Bahi oil station and the Mabrouk oilfield, after forces guarding the installations, from which staff have already left, were forced to retreat.

However, uncertainty about talks between major powers and Iran over its nuclear programme capped oil's gains.

Any sign of a lasting agreement between Tehran and six world powers, the so-called P5+1 group, could result in a flood of Iranian crude.

Traders were also looking to weekly US government inventories data due on Wednesday to provide direction. An industry report showed a smaller than expected build-up in US commercial crude stocks last week.

REUTERS