4Q Will Be ‘Rough’ If Oil Demand Rises – Qatari Minister

The Organization of Petroleum Exporting Countries will be hard pressed to meet consumers’ needs in the fourth quarter if oil demand registers its typical seasonal gains, Qatari Oil Minister Abdullah bin Hamad Al Attiyah said Monday.

Oil markets are currently well supplied, Al Attiyah said. But OPEC’s main concern should be the fourth quarter, when the group theoretically could reach the limits of its ability to pump more oil.

“OPEC is at its highest production in history,” Al Attiyah said in an interview in Washington. “I am concerned about that. If demand is raised in the fourth quarter as usual, then we will be in a tight position.”
“If we reach the full capacity now, we will tighten in the fourth quarter. The spare capacity will be smaller and smaller, reaching a plateau when there is no more oil,” he said.

For the moment, none of Qatar’s customers are complaining about a lack of supply or asking for more oil, Al Attiyah said. That oil prices remain volatile and above $50 a barrel in New York is evidence that markets have veered away from fundamentals, he said.

“What we are seeing is the price moving up and down very dramatically without any indication why,” the minister said. “It makes me think the classic fundamentals of supply/demand have no meaning anymore.”

“The market is being hijacked by somebody. The speculators are not tired. We thought in April they would be finished for awhile, but now they are back,” he said.

But his comments validated a major concern of oil traders, which is that supply will be badly stretched this winter. Al Attiyah himself said OPEC shouldn’t focus on May or June, but on the looming problems at the end of the year.

“If in the fourth quarter we see demand higher than today, it will be rough,” Al Attiyah said.

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