* Big buyers say no need for more Saudi crude in March
* Industry sources in Saudi say output policy unchanged
* Traders expect higher output later in the year
By Alex Lawler and Amena Bakr
LONDON/DUBAI, Feb 11 Oil companies that buy
Saudi Arabian crude have not requested extra supply and sources
in the kingdom say production policy is unchanged - indicating
steady output despite a jump in prices to $118 a barrel.
Sources at oil companies in Europe, China and Japan told
Reuters they have not asked to buy more crude for March, and
also that Saudi state oil company Saudi Aramco has not offered
Industry sources in Saudi Arabia say the kingdom's
production policy is unchanged: the supply response will be
driven by demand not price. If consuming countries do not order
more oil, then Riyadh will not raise output.
OPEC's biggest exporter responded to slower demand at home
and abroad by lowering supply by around 700,000 barrels per day
(bpd) over the last two months of 2012, a reduction that
coincided with a rise in crude prices.
Saudi Arabia is expected to open the taps again in coming
months due to higher global demand in the second half of 2013
and a seasonally higher need for crude in domestic power plants.
Extra supply may not been seen this month or next, though.
"The bottom line is Saudi exports will rise again," said a
source who tracks oil flows for a major oil company. "But this
is unlikely in February."
The Saudi cutback in December supported the market, although
a senior Saudi oil ministry adviser said the move was not aimed
at lifting prices, which Saudi Oil Minister Ali al-Naimi says he
would like to see around $100.
So far, Saudi output has not increased. Oil production was
steady in January at 9.05 million bpd, an industry source said
this week, and supply to the market nudged up to 9.26 million
bpd due to deliveries from storage.
The drop in output in Saudi and some other members of the
Organization of the Petroleum Exporting Countries has brought
the group's supply down in January to 30.53 million bpd,
according to a Reuters survey - the closest it has yet been to
OPEC's 30 million bpd target adopted a year ago.
An official at a Gulf OPEC country saw no need for an
increase in production despite the rally in Brent crude to $118,
since output was still above OPEC's ceiling and the expected
demand for OPEC crude.
"It is already higher than what has been agreed, so I don't
think there needs to be an increase," said the official, who
declined to be identified.
SEEKING NORMAL VOLUMES
Oil buyers in Asia, which buys the bulk of Saudi crude, and
Europe said demand remains seasonally low so there was no need
to ask for more.
A buyer in China said it planned to ask for "normal volumes"
of Saudi crude in March, while two customers in Japan said they
nominated contractual volumes. None of them was offered extra
"Refiners are due to submit their nomination for March
supply today, but they are unlikely to seek more as Asia's
demand is expected to fall in the second quarter with the end of
peak winter demand and as the maintenance season will start," a
Singapore-based trader said on Friday.
"Plus, if refiners want additional supply, they can buy spot
cargoes as prices are weak."
In Europe, sources with two Saudi customers also said they
were not looking to buy more crude and other traders said they
were not seeing any sign of extra Saudi supplies.
"At the moment I would say no," said a customer in Europe.
"It doesn't appear a more aggressive strategy to sell more
The lack of any extra Saudi or Gulf production to restrain
the rally in prices is leading some in the market to see signs
that the price aspiration of $100 is creeping upwards.
"We know now that the Gulf OPEC members are not ready to do
anything at current prices," said Olivier Jakob of Petromatrix.
"For a supply price-reaction from OPEC we will have to wait for
the top price line of 2011 and 2012 at $125."
(Additional reporting by Florence Tan in Singapore, Judy Hua in
Beijing, Osamu Tsukimori in Tokyo, Reem Shamseddine in Dubai;
editing by William Hardy)