Oil nears $50 a barrel with demand growing

OPEC’s strategy to defend market share over prices is working as oil approaches $50 a barrel amid rising demand and declining output from producers including US shale companies, Kuwait’s acting oil minister said.

Oil will end the year at $50 a barrel and the market will rebalance in the third or fourth quarter of the year, Anas Al-Saleh, the acting oil minister, said on Wednesday.

Demand is growing and about 3 million barrels a day of crude supply have been lost due to a drop in global production, he said.

OPEC’s market share “theory has been working well,” Â Al-Saleh, who is also finance minister and deputy prime minister, said.

"Now we see better prices in the market, demand has been increasing - part of it is outages of production in Canada, Libya, Nigeria and the shale oil."

Oil prices have fallen by about 35 per cent since the November 2014 meeting of the Organisation of Petroleum Exporting Countries, when Kuwait joined Saudi Arabia in leading the producers' group to shift its strategy from supporting prices to defending sales against higher-cost output including US shale.

The decline in prices and oil revenue strained Kuwait’s official budget, though OPEC’s strategy is showing some signs of success with crude rebounding about 80 per cent from a 12-year low in January.

Benchmark Brent crude slipped as much as 1.9 per cent to $48.02 a barrel on Thursday.

- Bloomberg