Absolutely nothing of interest here - Saudi production levels are still on auto-pilot at more or less the levels of the last year.
The count of oil rigs in the country (from Baker Hughes) continues to decline, suggesting that the Saudis feel they have done enough for now in terms of the capacity expansion/restoration program that began in 2005, and are comfortable with the amount of spare capacity they have (whatever that is) relative to demand.
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Looks like historical volatility is at or very near a 25-year low. Highly unusual. Arguably the Saudis are shifting from targeting price last year to targeting production very precisely. Which is what one would expect post-peak. And the King has started talking more about long term production and husbanding of resources. (Interpretation: "This is what we are doing, world. Plan your affairs accordingly")
Well, my guess is it's simpler - since they arrested the fall in prices following the 2008 financial crisis, prices have been in a band that is pretty comfortable for them, so they haven't felt a need to adjust production up or down.
There was a story in yesterday's Drumbeat about the GCC grid, linking KSA/Bahrain/Qatar/Kuwait so far, and other nations in the area in the next few years as well. J Callahan and I chatted/graphed about the possible impact on KSA demand, which has that strong seasonal spike in the summer when everyone is turning on the A/C 24/7 and they're dumping crude oil into the boilers: Permalink My graph shows decreasing YOY demand, suggesting that the interties are doing their thing. Will be interesting to see what happens this summer.
I'm reminded of the joke from Saudi Arabia:
Q. What's the best price for a barrel of oil?
A. $100.00... $100.00... $10.00... $100.00...
Every time anyone else in the world starts getting serious about developing alternative energy sources (with subsidies for solar power of biofuels or whatever), they lower the price of oil low enough to kill the alternatives, wait until the buying public goes back to driving gas guzzlers again, and Whammo!
Could something like that happen again, or are the Saudi's so desperate for money, and is the post Peak Oil demand so high (despite the continuing recession) that they'll keep the prices as high as possible this time?
The count of oil rigs in the country (from Baker Hughes) continues to decline, suggesting that the Saudis feel they have done enough for now in terms of the capacity, for more http://khmer111.blogspot.com
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