The Oil Drum | Playing detective with Saudi production numbers

26 comments on Playing detective with Saudi production numbers

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steverino on December 16, 2005 - 2:35am

perhaps the results of this kind of analysis is the reason the saudis are pushing the "we've got to cut back production in the second quarter,because we don't want flood the market with oil" line.

do they feel there is a problem with lack of demand or have they been pushing their fields hard enough that they must pull back production? do you foresee a lack of demand with the US and asians wanting to fill their SPR's, as well as the usual buildup before the summer driving season?

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MicroHydro on December 16, 2005 - 5:16am

Bingo steverino! Demand destruction is a fraud. US consumption broke a new record in the week ended December 9th. Like everything else in the US, this is based on deficit spending - tapping the SPRs of the US, Europe and Japan. The Saudi wells are in serious trouble, up to 90% water cut in some. They need to throttle back, at the same time that the SPRs will need refilling.

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pbrewer on December 16, 2005 - 11:56am

I don't think there's any evidence that demand destruction didn't happen. Certainly no evidence that it's a "fraud." (Who is defauding whom?)

Gasoline prices at the pumps here dropped to $1.999 during the week ending December 9th, so I'm not a bit surprised that gasoline consumption spiked back up.

It remains to be seen what the quantity demanded will be at various prices (and how it changes over time if we see prices move higher, but then stay relatively stable at some higher price). I'm actually really interested to see what consumption choices people make when faced with higher prices.

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mominer on December 16, 2005 - 5:38am

Perhaps the Saudis are saying in a subtle way that they have reached their peak production. We all know they will never be able to produced some of the numbers they claim. If the the Saudis say they need to throtle back production perhaps it's because they are already starting to see their produciton fall off but are not telling the rest of the world.

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26 comments on Playing detective with Saudi production numbers

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