Oil producers outside of OPEC should cut their “irresponsible” output with excess supplies harming the market, the United Arab Emirates energy minister said.
The oil market is oversupplied by 2 million barrels a day, Mohammed Al Sada, Qatar’s energy minister, said in an interview on the sidelines of a conference in Abu Dhabi yesterday. The Organization of Petroleum Exporting Countries has produced about 30 million barrels a day since January 2013 while global output climbed more than 2 million barrels a day to 93.6 million barrels, according to data compiled by Bloomberg.
“We call on all other producers to stop the increase because the increase is harming the market,” U.A.E. Energy Minister Suhail Al Mazrouei said in a separate interview at the conference. “If the increase stops, and they follow OPEC’s lead, OPEC’s decision is to fix production, if production stabilizes in 2015 things will stabilize much faster.”
Brent oil prices tumbled more than 40 percent this year. OPEC decided last month to keep production unchanged at 30 million barrels, resisting calls from cash-strapped Venezuela that the group needs to stem the rout in prices.
“Irresponsible production from outside OPEC is behind the fall in prices,” Mazrouei said in a speech at the conference. “The market will improve over time.”
Brent gained $1.11 to $62.49 a barrel on the London-based ICE Futures Europe exchange at 11:41 a.m. Singapore time. It increased 3.6 percent on Dec. 19. West Texas Intermediate added 93 cents to $58.06.
Output in the U.S. is the highest in three decades, and production is poised to approach a 42-year high next year as declining equipment costs and enhanced drilling techniques more than offset the drop in oil markets, according to Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.
Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking.
While U.S. oil drillers idled the most rigs in almost two years this month as they face falling oil prices, OPEC is resisting calls to cut its output and Exxon Mobil Corp. plans to increase its oil production next year.
“It’s a normal process, that the efficient producers produce,” Saudi Arabia’s Oil Minister Ali al-Naimi said at the conference. “Certainly Saudi Arabia is not going to cut.”
The estimate of a 2-million barrel oversupply is more than the 540,000-barrel surplus signaled from International Energy Agency figures as of Sept. 30. Global production was 93.6 million barrels a day compared with demand of 93.06 million barrels, IEA figures show. Global output was 90.54 million barrels a day early 2013.
“We are now in a provisional, correctional period,” Qatar’s Al Sada said. “Markets have stabilization mechanisms that will bring stability. We don’t know exactly how long it will take but it will stabilize because the current prices will separate the efficient producers from the producers who have high costs.”