November Saudi Oil Production

Izabella Kaminska at the FT's Alphaville notes that the Saudi Oil Minister has been saying that Saudi Arabia produced over 10mbd of oil in November, but that international agencies don't agree:

So while Saudi Arabia’s oil minister Al-Naimi reckons as much as 10m barrels per day are being produced, the market ‘feels’ that approximately 9.6-9.75m per day are hitting the market.

The most obvious explanation for the discrepancy, says JBC Energy, is additional demand from Asia based on the fact that marginal barrels are currently flowing in from more expensive Atlantic-Basin markets.

That or the fact that something in the region of 400,000 barrels of crude per day has been directed straight into a market black hole.

(A graph of all the latest available data is above. Note particularly the still sharply climbing rig count.)

It's important to note that this kind of thing happens a lot.  For example,  in March there was a discrepancy of several hundred thousand barrels a day between what Mr Al-Naimi had said and what Saudi Arabia itself later reported to JODI.  Then in July there was again a situation where Saudi Arabia apparently said it would produce 10mbd but fell several hundred kbd short.

So Ms Kaminska should consider the possibility that it is simply the character of Mr Al-Naimi that, even when he speaks with considerable precision, his words will not subsequently be confirmed either by international agencies or his own country's reports on their oil production.

Notwithstanding that, it is of considerable interest that Saudi production increased substantially in November despite the fact that Brent has been falling overall.  I take this as a (minor) point of evidence in favor of the idea that the fall in September/October was something Saudi Aramco could not easily avoid, because they are producing at or near capacity and thus the level of production is subject to minor technical glitches in the individual oil fields, as opposed to the idea that Saudi Arabia was intentionally reducing production because prices were falling.