‘Oil market still weak despite recovery’

DUBAI — Oil prices have been recovering but are still weak, the head of Gulf giant Saudi Aramco said on Monday, warning that market volatility could persist in the near future.

"While the oil market has recovered from its most severe period, it's still weak," Aramco Chief Executive Officer Amin Nasser said at an energy conference in Dubai.

He said global supply has begun to fall, "especially US shale oil", due to the cancellation or deferring of investments in new oil and gas capacity.

"Despite volatility, the market is heading toward rebalance, and prices are likely to strengthen with time," Nasser said.

"However, market volatility could remain with us for the near future."

Oil prices rose modestly ahead of a meeting of producers from the Organisation of the Petroleum Exporting Countries cartel and Russia in Algeria this week that could agree to cap supplies.

Around 1100 GMT, the US benchmark West Texas Intermediate for delivery in November was up 54 cents at $45.02 a barrel.

Brent North Sea crude for November added 60 cents to $46.49 a barrel compared with Friday's close.

Despite the positivity, fears remain that an agreement cannot be reached in Algiers. Previous attempts to do so in April were scuppered by Iran, which had just emerged from years of Western-imposed nuclear-linked sanctions.

Oil prices have been hammered by a stubborn supply glut since late 2014 that has seen supply far outweigh demand, resulting in 13-year lows earlier this year.

The Aramco chief said the company that runs the kingdom's oil production has set 2018 as a target for the anticipated listing of some of its shares as part of a privatisation programme.

"The current listing target is 2018," he said, pointing out that shares will be listed on the Saudi stock exchange and "potentially" abroad.

Aramco's listing is at the heart of Saudi Arabia's wide-ranging Vision 2030 plan to wean the economy of the world's biggest petroleum exporter off oil.

The kingdom plans to float less than 5 per cent of Saudi Aramco on the stock market.