(Adds details, quotes, updates oil price; figures in U.S.
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.