(Adds details, quotes, updates oil price; figures in U.S. dollars)
CALGARY, Sept 7 Oil market fundamentals do not justify a crude oil price as high as $70 a barrel, which is below today's level, Exxon Mobil Corp's (XOM.N) top executive said on Friday.
"I cannot explain why we have $70 oil. The fundamentals behind supply and demand do not support $70 oil. The fundamentals support something much less," Exxon Mobil CEO Rex Tillerson told a business roundtable at the Spruce Meadows equestrian facility on the outskirts of Calgary.
Exxon Mobil, the world's largest publicly traded oil company, produces about 2.5 million barrels of oil a day and its refineries use 6 million barrels a day, requiring it to go into global markets to buy the remainder, Tillerson said.
The company and others in the industry have little trouble buying the crude they need on a daily basis, he said.
Oil prices rose 40 cents on Friday to close at $76.70 a barrel and traders cited tight supplies for the gain.
"There's something else going on there that I don't get," Tillerson said, speaking to an audience of business and political leaders about energy security.
He said he believes Saudi Arabia has the oil resources and technological ability to boost its daily output capacity to 12.5 million barrels. However, he did not give a timeframe for such an increase.
Extracting new crude will be a more expensive proposition than producing oil from the current fields. Development would cost C$1.50 to $2 a barrel versus about 50 cents for today's output, he said.
Saudi Arabia, the top OPEC oil source, produced about 8.7 million barrels a day in August. Its capacity has been pegged above 11 million and it has set plans to increase it 12.5 million by 2009.
Our top photos from the past week.