Oil may rebound end 2016, says UAE minister

Abu Dhabi - First six months, however, will be tough, says Al Mazroui.

UAE Minister of Energy Suhail bin Mohammed Faraj Al Mazroui has expressed his optimism that plummeting oil prices will recover sometime before the end of the year.
Speaking to 150 business executives assembled at the UAE Energy Forum in the capital, the minister said that a gradual "correction" will happen towards the end of 2016. The first six months would be "tough", Al Mazroui added.
"I am personally convinced that before the end of 2016 we're going to see a correction. The market fundamentals tell us this," he said.
Last year, Al Mazroui said there were expectations of a growth in demand of 1.2-1.5 million barrels per day, but actually the growth reached 1.5 million barrels per day as lower prices resulted in higher demand.
Al Mazroui said that non-Opec growth in yearly gradual increase has waned about 80 per cent last year. The current strategy of the Organisation of the Petroleum Exporting Countries was working, adding that time was needed to allow this to happen - perhaps between a year and year-and-a-half.
"It's a fundamental change", allowing the market to balance itself, the minister said.
He said oil producers cannot intervene artificially, as it won't last because of a smaller market share.
Al Mazroui rubbished the spin given by media on plummeting oil prices is a result of a war for prices or market share.
The UAE, with 5.9 per cent of the world's oil reserves and 3.1 per cent of its natural gas, always wanted to have a buffer to help manage the gap between supply and demand, if anything happens. Otherwise it could cause another crisis, Al Mazroui said.
Despite lower oil prices, the UAE is not cancelling any announced projects, he added.
The minister said that the Adnoc group of companies is working with its foreign partners to cut operating cost in order do away with the wasteful expenditures and to become smart.
"We are seeing very good results" of this strategy, he said.
On Iran's ambitions to boost output, Al Mazroui said that every country has a right to plan according to its strategies. "I think all the members including Iran have the right to increase their production. I don't think we are going to restrict anyone," Al Mazroui said. However, when Abu Dhabi decided in 1999 to boost its daily output to 3.5 million barrel a day from 2.7 million bpd, it took it eight years to plan and execute its expansion projects and costing over $75 billion.
Many oil producers have put on hold their investments plans into the hydrocarbon sector until the market recovers from the current price levels. He was of the view that oil-producing countries won't produce if they lose.
The minister said that the hydrocarbon industry is resilient and will emerge strong in the current low oil price environment.
Opec members produced 31.5 million barrels a day in 2015 against a forecast of 30 million barrel per day.
- haseeb@khaleejtimes.com