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Share Price: 483.00
Bid: 481.65
Ask: 481.80
Change: 0.45 (0.09%)
Spread: 0.15 (0.031%)
Open: 479.30
High: 483.25
Low: 477.30
Prev. Close: 482.55
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UPDATE 1-OPEC hopes for further oil price recovery despite glut

Tue, 02nd Jun 2015 14:07

(Adds quotes, Venezuela comment)

By Alex Lawler and Rania El Gamal

VIENNA, June 2 (Reuters) - Angola's oil minister said onTuesday that $80 per barrel may be right for crude, joining achorus of OPEC officials and delegates hoping for a furtherprice recovery in months to come despite a global glut.

"I would like the price (to) go up, but it is not easy,"Jose Botelho de Vasconcelos told reporters.

OPEC meets on Friday and is widely expected to maintain itsproduction policy. Last November, OPEC refused to cut output andchose instead to defend market share, adding to the supplysurplus arising from booming U.S. oil output.

The decision prompted a crash in oil prices to as low as $46per barrel in January, although crude has recovered to $65 inrecent weeks on hopes of a slowdown in U.S. output growth.

On Monday, Saudi Arabia's oil minister Ali al-Naimi said hesaw supply thinning and demand improving although he added thatit could take time for the markets to rebalance as supply wasstill seriously exceeding consumption.

Naimi gave no oil price outlook. However, several OPECofficials who asked not to be identified told Reuters they sawcrude rising to $70-80 a barrel in coming months and 2016.

In the United States, the upcoming driving season wouldencourage a further increase in demand, one of the officialssaid.

LIFELINE

The message will please some of the poorer OPEC members whosuffered badly from the price crash and a drive by wealthy GulfOPEC countries to embark on a market-share battle with non-OPECproducers.

But higher prices might also throw a lifeline to thehigh-cost producers - some U.S. oil firms have said they wouldstart drilling actively again if crude went above $60 perbarrel.

"What has helped clean up the market somewhat is demandstrength, which has surprised everyone including OPEC, togetherwith commercial and SPR (strategic petroleum reserve)stockpiling by China," analysts from Energy Aspects said in anote on Tuesday.

"But China's storage needs are ultimately finite, andunlikely to last in the same scale much beyond 2016 ... So, forSaudi Arabia's strategy to work, prices and expectations offuture prices cannot rise too quickly, as that could reverse alot of the work already in motion," it added.

Brent crude oil for July was up 40 cents at $65.29 abarrel by 1315 GMT.

Some of the poorer OPEC members, including Venezuela, hadhoped to persuade the group to cut output by bringing non-OPECon board. However, non-members such as Russia have shown littlewillingness to coordinate their energy policies with the cartel,meaning the dialogue has all but died down in recent weeks.

On Tuesday, Venezuela's oil minister Asdrubal Chavez issueda statement calling for the establishment of a technical workinggroup between all producers.

No special meeting between Saudi Arabia and Russia isplanned for this week, although Russian energy ministerAlexander Novak is due to attend an OPEC seminar on June 3.

"It is unrealistic to ask countries to shut in thelowest-cost production in the world so that the high-costproduction can stay, so what we are seeing is just naturaleconomics," the head of oil major BP, Bob Dudley, said onTuesday when asked whether OPEC would cut output at its meeting. (Additional reporting by Reem Shamseddine in Vienna and MichelRose in Paris; Editing by Dale Hudson)

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