02/05/2011
Saudi lifts April oil output to 8.5m bpd
Saudi Arabia's crude oil output edged back up in April to around 8.5 million barrels per day (bpd) from roughly 8.3 million bpd in March as demand picks up, Saudi-based industry sources said yesterday.
The kingdom slashed output by 800,000 bpd in March, due to oversupply, oil minister Ali Al-Naimi said last month, adding that he expected production in April to be a little higher than March's level. "Production was around 8.5 (million bpd) in April and the reason we raised output is because there was higher demand," said one Saudi-based industry source, declining to comment on where demand had strengthened.
A second industry source said the 8.5 million bpd may not include production from the Neutral Zone, which Saudi shares with Kuwait. Saudi crude exports were also higher in April from February and March, said a trader without quantifying figures.
Since the start of the year consumers have urged the oil exporters to pump more crude to put a cap on oil prices, which surged to more than $127 a barrel last month, its highest level in 2-1/2 years amid unrest in North Africa and the Middle East and a declining dollar exchange rate.
But the key is, Saudi will only increase output if there is a supply gap in the market or to meet extra demand (and) not for any price-related reason because the price today is due to speculation," said another Saudi-based source. Gulf oil exporters expect demand to go up in the coming months as European refiners return from their spring maintenance period and Japan scrambles to rebuild its earthquake-shattered electricity grid.
I expect [Saudi] production to respond to market demand ... and I expect it to be around 9 million bpd towards end of May-early June," said Sadad Al-Husseini, a former top executive at State oil giant Saudi Aramco.
A Gulf-based trader also said there is strong demand for lighter grades on the back of Japan's requirements. The top OPEC producer had sold 2 million barrels of a special blend of crude to compensate for the high-quality Libyan barrels lost. -Reuters
