x Abu Dhabi, UAEWednesday 26 July 2017

State official indicates concern over oil prices

The increasing oil price is a worry for some Opec members

KUWAIT CITY // Oil prices have reached a worrying level for some Opec producers, the head of Kuwait's national oil company indicated, as crude reached another 30-month high in New York.

Futures contracts for the US benchmark West Texas Intermediate crude approached US$109 a barrel yesterday, while Europe's Brent crude extended recent gains, nearing $120.

"We are enjoying these higher prices but in the longer term we'd like to see a lower price," Farouk al Zanki, the chief executive and deputy chairman of Kuwait Petroleum Corporation, told an oil and gas summit yesterday in the state.

Crude advanced for a third day as concerns mounted that the fighting in Libya between rebels and forces loyal to Muammar Qaddafi would extend deep cuts in oil exports from the North African Opec producer.

"It's becoming increasingly clear that the situation in Libya may be prolonged," said Christopher Bellew, the senior broker at Bache Commodities in London.

"The more one looks at uprisings in the Middle East, the more one realises they will not be easy to resolve. At the same time, oil demand is relatively inelastic to higher prices."

Stronger US economic signals have also bolstered crude markets in recent trading sessions.

Unemployment in the world's biggest economy fell to 8.8 per cent last month from 8.9 per cent in its fourth consecutive monthly decline, the US labour department reported last week.

"The US data paints a positive picture," Jonathan Barratt, the managing director of Commodity Broking Services in Sydney, told Bloomberg News. "People are still concerned about Libya but not overly. If Qaddafi decides to call it a day, then there will be a short, sharp sell-off."

"Crude oil prices can threaten the global economic recovery but it depends if high prices are sustained," Mr al Zanki said.

tcarlisle@thenational.ae