Analysts’ View: Saudi still favors $70-$80 oil

QUITO (BestGrowthStock) – Saudi Arabia reiterated it favored oil prices between $70-$80 a barrel and OPEC agreed to maintain output levels at a meeting on Saturday.

Following are comments from analysts:

EDWARD MORSE, MANAGING DIRECTOR, CREDIT SUISSE IN NEW YORK

“The fact that Naimi keeps saying $70-$80 a barrel makes it a meaningful statement.”

“When you have Venezuela saying $100 is adequate and Iran saying demand is weak even as it skyrockets, I think if they (the Saudis) don’t want a confrontation they will quietly supply more to the market.”

LAWRENCE EAGLES, HEAD OF ENERGY RESEARCH AT JP MORGAN IN NEW YORK

“The real issue here is whether additional supplies will be added. Minister Naimi said $80 was the top end of the range, let’s see if he follows up with higher supplies.”

“Economics 101 tells you that the price is there to balance supply and demand. If demand is rising and you do not add supply, then the price will rise to balance supply. OPEC knows this, and yet we still see comments such as ‘we will add oil if we see a shortage’ or ‘if you go and buy oil and cannot find it, that’s when we will add oil’. There will always be oil to buy; the question is at what price.”

“Really these comments underscore that OPEC wants lower inventories, and if it thinks the market will allow that to happen without higher prices it is mistaken.”

BILL FARREN-PRICE, CEO OF PETROLEUM POLICY INTELLIGENCE IN LONDON

“They can always pull a meeting together in a week if they need to, but the real issue is whether the current prices are a blip or a trend and I think they (the Saudis) believe the current price is a blip.”

“They have been successful in achieving relatively stable prices for the past two years and I don’t think they are convinced than this is anything more than a blip and rhetoric out of Wall Street.”

JOHN VAN SCHAIK, ANALYST FOR MEDLEY ADVISORS IN NEW YORK

“The market will agree with Naimi that the official Saudi target is $70 to $80 a barrel. The oil minister cannot say anything else but $75 because the King has said that’s the perfect price.

“At the same time, the minister has also said that consumers are comfortable with prices in the mid $80s and that current prices are not hurting the economy.

“So what the market is hearing is that the price is comfortable, its not hurting the economy, and the market is basically ignoring the official Saudi price range of $70 to $80.”

“I don’t think they (prices) will stay above $90 in 2011.”

“The market next year will be basically in balance. I believe we will see a slight tightening of the market, demand will just be slightly higher than supply if OPEC compliance stays where it is now. But there is so much excess in stocks that the market can easily deal with that.”

Analysts’ View: Saudi still favors $70-$80 oil