U.A.E. Sees Crude Price Gaining on Strong Demand, Less Shale

Oil Market Enters Peak Season: Here's What to Watch
  • Abu Dhabi National Oil to keep investing in projects awarded
  • Shale oil has ``role to play,'' energy minister says

Stronger economies in Europe and a continued decline in shale oil output signal higher crude prices in 2016 as global demand recovers, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.

“I’m optimistic that we will see an upward correction in 2016,” he said Tuesday to reporters in Abu Dhabi. “What’s the percentage of correction? I can’t say it’s going to be a high percentage, but there will be an improvement on 2015.”

Al Mazrouei didn’t specify the countries in Europe and elsewhere showing stronger growth, and he acknowledged that shale oil “is needed and has a role to play.” The market will determine how shale will contribute to future supply, he said.

The U.A.E., OPEC’s third-largest producer, has raised output this year amid a global glut, data compiled by Bloomberg show. The Organization of Petroleum Exporting Countries is competing for market share against high-cost suppliers, including some U.S. producers of shale oil. Brent crude, a global benchmark, has dropped 42 percent in the last 12 months and was trading at $49.17 a barrel at 1:19 p.m. on the London-based ICE Futures Europe exchange.

‘Tremendous Job’

State-run Abu Dhabi National Oil Co., known as Adnoc, will continue to invest in energy projects it has already awarded, even amid cheaper crude, Al Mazrouei said. “We are talking about major investments that have already taken place or major contracts that have been awarded,” he said. “We have companies that are operating, projects that are ongoing. We will not stop these ongoing projects. We will not cancel a project that has been awarded.”

Adnoc is “doing a tremendous job to reduce costs,” Al Mazrouei said. Abu Dhabi is the U.A.E.’s largest emirate and holds most of the nation’s oil reserves.

“We have a long term view of the market,” he said. “We know that prices fluctuate and will not stay as is.” 

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