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UPDATE 1-Saudi's Falih says oil price above $50 needed for investment -paper

Published 2016-07-12, 04:40 a/m
© Reuters. UPDATE 1-Saudi's Falih says oil price above $50 needed for investment -paper
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BERLIN, July 12 (Reuters) - The oil industry needs a price
of more than $50 per barrel to sustain investments, Saudi energy
minister Khalid al-Falih told a German newspaper while adding
that downward pressure on prices would prevail because of a huge
stocks overhang.
"We need a price higher than $50 to achieve a balance in oil
markets in the long term," Falih, who took over earlier this
year from veteran Saudi oil minister Ali al-Naimi, told German
business daily Handelsblatt.
"And just as $50 is too low to sustain investment, prices in
excess of $100 are too much. The optimum lies somewhere in
between," he said.
Falih said the oil markets were rebalancing thanks to output
drops in countries such as the United States but it would take a
long time before balance was achieved.
"We have seen a decrease in supply by roughly one million
barrels of crude oil per day," he said, referring to output in
the United States and Canada.
"At the same time, demand has recovered, meaning that supply
and demand are now more balanced again. But there are still
excess stocks on the market - hundreds of millions of barrels of
surplus oil. It will take a long time to reduce this inventory
overhang."
"That said, there are economic headwinds in some important
markets and we hope this does not trigger a slowdown in global
demand," he said.

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