Oil prices rallied on Friday, but still posted weekly losses, hit by comments from the world’s largest producer of crude Saudi Arabia and weak Chinese data.
Saudi Arabia said late on Monday it was ready to act to push oil prices down to “fair levels” by providing additional supplies to customers.
It was reported that the kingdom has contracted 11 supertankers with a capacity of two million barrels each to transport crude to the US within the next two weeks.
Furthermore, Saudi oil minister Ali al-Naimi said there was no shortage in the market, adding the kingdom was ready to raise its daily output by around 2.5 million barrels from the current rate of nearly 10 million barrels to meet rising demand.
“We are ready and willing to put more oil on the market,” said al-Naimi, adding that current high oil prices were unjustified on a supply-demand basis.
Crude futures faced more pressure from concerns about slowing economic growth in China, currently the world’s second largest oil consumer.
Early in the week BHP Billiton said iron ore demand in China is flattening as its rapid industrial expansion slows down.
“The (Chinese) economy is shifting, it's changing. Steel growth rates will flatten and they have flattened,” said Ian Ashby, president of BHP’s iron ore business.
On Thursday, HSBC said its China PMI index for March came in at 48.1, marking a fifth straight month of contraction in its manufacturing sector.
Late in the week, demand for oil futures was lifted by reports that exports of Iranian crude fell sharply as a result of sanctions imposed by Europe and the US.
A Reuters report said data compiled by Geneva-based consultancy Petrologistics showed that Iran’s oil shipments dropped from 2.2 million barrels per day (bpd) to 1.9 bpd.
The sanctions were in response to Iran’s unwillingness to halt its uranium enrichment programme, which it claims is entirely peaceful, while the West believes the country is trying to illegally develop a nuclear weapon.
US light, sweet crude for May delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), ended the week at US$106.87/barrel.
May Brent crude closed at US$125.21/barrel on the ICE Exchange yesterday.
Oil and gas majors were in decline this week. BP (LON:BP.) dropped from 490 pence to 477.55 pence over the past five days of trading, while fellow supermajor Royal Dutch Shell (LON:RDSB) retreated from 2,285 pence to 2,236.5 pence.
Tullow Oil (LON:TLW) slipped from 1,528 pence to 1,473 pence and BG Group (LON:BG) declined from 1,547 pence to 1,492 pence.