Saudi’s Falih says oil stocks still building, but OPEC to act if needed

Saudi’s Falih says oil stocks still building, but OPEC to act if needed
Saudi Arabia's Energy Minister Khalid al-Falih

Saudi Arabia'sEnergy Minister Khalid al-Falih said on Saturday that OPEC will be responsiveto the oil market's needs, but that he was not sure there is an oil shortagewith data, particularly from the United States, still showing inventoriesbuilding.

Speaking in Jeddahahead of a ministerial panel gathering on Sunday by top OPEC and non-OPECproducers, including Saudi Arabia and Russia, Falih told Reuters OPEC will notdecide on output until late June when the group is due to meet.

The Organization ofthe Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producershave agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1for six months, a deal designed to stop inventories building up and weakeningprices.

"We will beflexible. We are going to do the right thing as we always do," Falih saidof any decision at the meeting in June on continuing the reductions.

Falih said OPEC isguided by two main principles: "One to keep the market in its directiontowards balancing and inventories back to normal level. And two to be responsiveto market needs. We will strike the right balance I am sure."

OPEC's agreed shareof the cuts is 800,000 bpd, but its actual reduction is far larger due to theproduction losses in Iran and Venezuela. Both are under U.S. sanctions andexempt from the voluntary reductions under the OPEC-led deal.

U.S. President Donald Trump has called on OPEC and Saudi Arabia, asked them to lower oil prices.

Sunday'sministerial panel meeting, known as the JMMC, comes amid concerns of a tightmarket as Iran's oil exports are likely to drop further in May, and shipmentsfrom Venezuela could fall more in coming weeks due to the sanctions byWashington.

Oil contaminationalso forced Russia to halt flows along the Druzhba pipeline – a key conduit forcrude into Eastern Europe and Germany – in April. The suspension, as yet ofunclear duration, left refiners scrambling to find supplies.

"I am not surethere is a supply shortage, but we will look at the (market) analysis. We willdefinitely be responsive and the market will be supplied," Falih said.

"Allindications are that inventories are still rising. We saw the data from theU.S. week after week, and they are massive increases, so obviously (there is)supply abundance."

U.S. crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, the Energy Information Administration (EIA) said on Wednesday.

An OPEC andnon-OPEC technical committee found that oil producers' compliance with thesupply-reduction agreement reached 168% in April, three sources told Reuters onSaturday.

The committee knownas the JTC met ahead of the JMMC gathering to discuss the oil markets.

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