Naimi says OPEC doesn’t need output cut in 2010

OPEC does not need to cut output in 2010, according to the latest figures on supply and demand, the oil minister of top exporter Saudi Arabia told Reuters on Tuesday.  Demand for Saudi crude was increasing, and this was evidence the world’s economy was recovering from recession, Ali al-Naimi said in a wide-ranging interview, which touched on alternative energy as well as fossil fuel.

“No, based on the current (demand and supply estimates), there is no need of course, right now,” Naimi said, when asked if OPEC would need to cut supply in 2010. He spoke ahead of the inauguration of the King Abdullah University of Science and Technology (KAUST), near the Red Sea port of Jeddah.

“But you never know, this is a moving target, it is a very active market. The world economy seems to be recovering. I hope it will recover fast and therefore it will impact demand. If demand rises of course supply has to match it... Demand for our oil is rising, and so we are - at least I am - convinced that economic growth is started and will continue.”

Global oil stocks have climbed above the five-year average in defiance of OPEC output curbs that aimed to match supply with a fall in demand following the economic downturn.

Some oil market observers have said the producer group, which pumps more than a third of the world’s oil, would have to cut output again next year to balance the market.

OPEC has held output targets steady since December last year, when it announced the final stage of a record 4.2 million bpd reduction in supply which it enforced with a high level of discipline. The curbs helped the oil price recover to more than $70 from a low of $32.40 in December and Naimi has for several months voiced confidence the economy would recover and oil prices would be strong enough to encourage investment without stifling nascent growth. Prices extended gains on Tuesday after the Naimi interview. At OPEC’s last meeting earlier this month, the minister brushed aside concerns within the oil community about high inventories, saying economic growth was driving the price.

A relaxed Naimi spoke extensively to reporters on the sidelines of the OPEC talks, but he rarely gives interviews to news agencies.