Saturday, April 30, 2011

Small Saudi Arabia Caveat


A week or so back, there were reports that Saudi Arabian officials had sharply cut oil production in March:
Saudi Oil Minister Ali Al-Naimi said Sunday that oil production from the kingdom was 8.292 million barrels per day in March, down about 800,000 barrels a day from 9.125 million barrels per day in February. Most estimates, including the monthly report of OPEC—which relies on external databases—had seen a rising or stable production at about nine million barrels a day in March.
At the time, the OPEC Monthly Oil Market Report ("based on secondary sources") showed 8.961mbd in March, versus 8.904 in February.  Today, I checked the IEA, which have now released the detailed tables for March, and they also show flat production of 8.62mbd in March, exactly the same as the 8.62mbd in February.

So, for whatever reason, the international agencies do not seem to be accepting the idea that Saudi Arabian production dropped sharply in March.  It will be very interesting when the JODI number comes out.  That is based on Saudi Arabian self reports, and it will be intriguing to see if official Saudi reports of their production bear any relationship to what the oil minister says to the press.

For the time being, I am leaving Mr al-Naimi's statement as the March JODI number (the orange curve above) pending an official report.  However, the inclusion of the IEA March data point has caused the overall index (black) to drop less sharply than in my last version of this graph.

The graph is not zero-scaled, to better show changes. Also, it's worth noting that the green curve from the EIA will not be continuing any further, since the government has cut it to save money.

3 comments:

A said...

The IEA report does note that production may have dropped after Mid-March.
"Initial reports in early March suggested that
Saudi Aramco would ramp up and hold output at just over 9 mb/d for the month, but the earthquake
and tsunami that have devastated northeastern Japan reduced overall demand for the country’s crude. A
number of cargoes en route to Japan were diverted elsewhere in the region. As a result, Saudi Aramco is
thought to have throttled back production in mid‐March."

James said...

I remember when the ostensibly independent FED stopped releasing info on the M3:
http://prudentinvestor.blogspot.com/2005/11/unpleasant-trend-fed-counters-by.html

I wonder if things will ever get so bad that government agencies will need to stop releasing data on employment levels?

George said...

Stuart, in this blog post dated April 20th, I speculated that the Saudis didn't really cut their production as deeply as the oil minister claimed. I based that hunch on the "can't keep their story straight" image the Saudis have been projecting, together with a couple of stunning charts by Jon Callahan which show a serious drop in Saudi oil stocks.

As part of the investigation, the blog post above also details an apparent heavy-handed editorial intervention at Reuters related to the coverage of the Saudis' March oil output figures.