Saudi Arabia: Crude Inventopries Too High

Ali al-Naimi, the Saudi Arabian oil minister, has said that inventories of crude oil are too high, indicating that OPEC, which supplies two out of every five barrels, should cut output.

Ministers of the Organization of Petroleum Exporting Countries will next meet in Nigeria on Dec. 14 to decide whether to cut production for a second time in two months. The group decided in October to reduce output by 1.2 million barrels a day starting Nov. 1, to limit a decline in oil prices from the record $78.40 a barrel in July to $63.43 at the end of last week.

"I agree that we have to take 100 million barrels out of the market," Naimi said in Cairo on Saturday, where there is a meeting of Arab oil ministers, without specifying how that should be done. OPEC's president, Edmund Daukoru, said last week that the group should cut output by at least 500,000 barrels a day.

John Hall, director of the British energy consultancy John Hall Associates, said: "OPEC is driven by price and the price now is too high, it's double what it was three years ago. I doubt that they would cut production."

Global oil inventories stand at 2.3 billion barrels, Naimi said, citing figures from the Organization for Economic Cooperation and Development. That is at least 100 million barrels more than a year earlier, he said.