MercoPress. South Atlantic News Agency

Saudi Arabia pumping more crude but oil futures rules

Top oil exporter Saudi Arabia has boosted crude supply to help meet the world's need for fuel and may further increase output later if needed, a senior Gulf OPEC source said on Wednesday quoted by Reuters.

"Whenever there is demand it will be met by OPEC" said the source familiar with the thinking of the Saudi family. "The majority of OPEC producers definitely don't like this high oil price because it is neither in their interest nor in the interest of the global economy, and it's especially painful for the developing world." US crude hit a record above 135 dollars a barrel last week and on Wednesday closed in the same range. OPEC's leading producer Saudi Arabia has been adjusting supply to match demand since August last year when prices were around 60 US dollars and it was pumping around half a million barrels per day (bpd) less than now. Saudi Oil Minister Ali al-Naimi said earlier this month output would rise by 300,000 bpd and hit 9.45 million bpd in June. Riyadh is pumping about 9.1 million bpd this month, the source said. Global demand is likely to increase this year by about one million bpd, with demand picking up in the third quarter, the senior Gulf OPEC source said, which explains the current Saudi production increase. Last September OPEC agreed a 500,000 bpd increase in its formal output targets, with Saudi Arabia providing the greatest share. The group holds its next official conference on Sept. 9 in Vienna. Most OPEC members would like to see lower prices, but there was little they could do as the market was responding to factors beyond supply and demand, particularly hedging by large funds from a weak dollar and lower US interest rates. If those fundamentals dictated the price, oil would cost around 60 to 70 US$ a barrel, the source said. The world oil market balance is similar to that in 1999, when the price was less than 20 US dollars, he added. "This big rush to oil futures is definitely leading to higher and higher prices" said the source "so adding more or taking less oil from the market will not change the oil price since the sentiment of investors in the futures market is pushing for higher prices".