RIYADH (Reuters) – Saudi Arabia said on Thursday the oil market could be shifting towards oversupply in the fourth quarter of the year as oil inventories rise and demand slows and the top oil exporter will “mirror” such changes in its production.
“We are of the view that the market in the fourth quarter could be shifting towards an oversupply situation as evidenced by rising inventories over the past few weeks,” Saudi OPEC governor Adeeb Al-Aama told Reuters on Thursday.
“So we want to be watchful not to over-correct and cause a substantial inventory build,” Al-Aama, who heads a joint OPEC and non-OPEC committee which monitors compliance and market fundamentals, said after a recent meeting of the panel, known as the JTC, in Vienna.
He reiterated that it does not push oil to the market but responds to its customers’ needs and said the increase in the kingdom’s oil production over the past months was in response to rising demand adding that “this is not in any way a push from our side, but rather a response to a market pull.”
“Saudi Arabia produces only what its customers ask for, not more. We saw strong demand for our crudes in the third quarter and we have increased our production accordingly,” he said.
“We think that demand will start dropping off as we approach year-end in accordance with regular seasonal patterns. We have the flexibility to adjust our production to mirror it.”
The OPEC governor is typically one of the most senior posts in a country’s OPEC delegation after the energy minister.
Editing by David Evans