Saudi Adviser: Oil Prices Will Firm Up

Saudi Adviser: Oil Prices Will Firm UpSaudi Adviser: Oil Prices Will Firm Up

Oil prices have started to stabilize around $60 a barrel in past weeks and will continue to firm up, while crude demand will grow stronger, an adviser to Saudi Arabia's oil minister said on Sunday.

The comments by Saudi oil adviser Ibrahim al-Muhanna suggested that the top oil exporter sees no need to reverse its policy of allowing the market to correct itself without cutting output, despite the steep price drop since June last year, Reuters reported.

Kuwait's OPEC governor said last week that OPEC was likely to extend its current production policy at the June meeting, in the first public comment on what will be a crucial decision determining the direction of global oil prices in the second half of this year.

It is still too early to say if OPEC will keep its output ceiling unchanged when the group meets in June, Muhanna said, but he added that he was optimistic about crude oil demand growth and expected future supply to stay "healthy".

"None of us know the future. Once the conspiracy theories lost their traction, serious commentators went back to fundamentals and the price started to stabilize around the $60 mark seen in the last few weeks," he said at an energy conference in Doha.

"With this in mind, I have reasons to be optimistic. I'm confident that demand will be stronger. Supply will remain healthy and prices will firm."

The recent drop in oil prices was due to expectations and speculation, not market fundamentals, Muhanna said, adding that Saudi Arabia remained committed to a stable oil market and stable oil prices.

Saudi Arabia was the driving force behind OPEC's recent shift in policy at its last meeting in November, when the group chose not to cut output and instead to fight for market share.

Global oil prices rebounded earlier this year, pushing Brent crude back above $60 a barrel for the first time since December. However, Brent settled near a one-month low below $55 on Friday, after sliding 9 percent on the week.