Monday, February 12, 2007

Saudi And Qatar Say They Probably Won't Cut Oil Production Further

Over the weekend, I discussed how to play the energy market. That theory was based on oil rising about and staying about $60/bbl. This news obviously hurts that play a great deal.

Oil tumbled $1 to $59 a barrel on Monday after the oil ministers of Saudi Arabia and Qatar said OPEC may well keep output unchanged at its March 15 meeting.

Ali al-Naimi, oil minister of the world's biggest exporter, said in an interview with the Wall Street Journal the oil market was in "much, much better health and balance".

U.S. crude was down 79 cents at $59.10 a barrel at 1024 GMT, having fallen as low as $59.61.

London Brent crude slid 81 cents to $58.20.

"If you are asking me are we going to make additional cuts or increase supply I do not know...But, most probably if the trend is like it is today with the market getting in much, much better balance, there may not be any reason to change," he said.

The remarks were consistent with comments Naimi made on Jan. 16, when oil was nearer $51. The Saudi view won immediate backing on Monday from Qatari Oil Minister Abdullah al-Attiyah.