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The crude oil market is paying little attention to a weekend statement from oil minister Ali...

The crude oil market is paying little attention to a weekend statement from oil minister Ali Naimi that Saudi production has been cut nearly 10% since February. This will cause the lowest level of OPEC output since the world economy was at a standstill 2 years ago, and gives truth to ideas that Saudi production overcapacity is a myth.
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Comments (9)
  • DrBenway
    , contributor
    Comments (300) | Send Message
     
    I think the article says exactly the opposite. The demand is actually falling because of high prices:

     

    Ali Naimi, the kingdom’s oil minister, has revealed that Saudi Arabia sharply reduced sharply its oil production last month – by a hefty 800,000 barrels a day – because of lack of demand
    19 Apr 2011, 09:57 AM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (545) | Send Message
     
    Could be, but the Saudis always say "we cut" to give the impression they have control over the situation. How many years has it been since Saudi Arabia actually hit its production goals? Look at a chart of crude production - it never went much higher even as the price went up several-fold last decade.

     

    I'm finding it more plausible to believe the overcapacity myth - the Saudis don't produce more because they can't.
    19 Apr 2011, 10:09 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1045) | Send Message
     
    "because of lack of demand"

     

    He didn't say anything about why they cut back production last month. So, you're wishful thinking by saying it's lack of demand, just like the author is wishful thinking that we're facing peak oil.

     

    They cut back production to force up prices, even tho' they're saying the prices are too high right now. That's what cartels do.
    19 Apr 2011, 10:12 AM Reply Like
  • Old Trader
    , contributor
    Comments (5726) | Send Message
     
    It seems like it wasn't all that long ago that the Saudis were saying they were "comfortable" with oil at $75/$80 bbl. Of course, that was before unrest swept the region, forcing governments to start subsiding things like food to try to assuage their populace.
    19 Apr 2011, 10:28 AM Reply Like
  • Duude
    , contributor
    Comments (3379) | Send Message
     
    Back in 2008 when oil was sky-high, there were a lot of calls for the Saudis to produce more. They later complained that they had supply that wasn't being bought. Saudi crude is a heavy crude much like that in Venezuela. it costs a lot more to refine and commands a lower price than WTI, brent, or Nigerian crude. It takes special refining equipment that was somewhat in short supply back in 2008. Since then both India and China have built on more capacity for heavy crude refining. Nevertheless, the much greater demand for light crude still today, over heavy crude may be due to a lack of the necessary refining capacity for heavy crude for the world market.
    19 Apr 2011, 10:44 AM Reply Like
  • kmi
    , contributor
    Comments (4035) | Send Message
     
    "Retail surveys show that motorists are already starting to buy less fuel."

     

    seekingalpha.com/curre...

     

    The CEO of Gulf Oil joins Goldman in calling the top for crude, saying the price will fall below $100/barrel by July 4. "We're starting to see (less demand) at all our 3.5K locations," says Joe Petrowski, believing a peak is coming within a month "if we haven't seen it already."

     

    seekingalpha.com/curre...

     

    Sorry Mr. editor, you know what I think tho, dontcha!
    19 Apr 2011, 11:12 AM Reply Like
  • Bozerdog
    , contributor
    Comments (464) | Send Message
     
    Supply demand doesn't matter with oil. It isn't elastic. Get some alternatives then we will see supply vs demand characteristics. Until then speculate the price to whatever you want. Domestic sources come online...doesn't matter, drill more...doesn't matter. Competitive alternative, matters.
    19 Apr 2011, 11:28 AM Reply Like
  • keberend
    , contributor
    Comments (2) | Send Message
     
    I wonder when the the US government, its institutions and its inhabitants will accept the fact that they are not any longer the only player in the oil market and that US demand destruction is of less importance to the other car drivers in the world. Crude oil demand in the world will and is going higher what ever US consumption is going to be.
    19 Apr 2011, 11:36 AM Reply Like
  • Old Trader
    , contributor
    Comments (5726) | Send Message
     
    keberend,

     

    Exactly! I just shake my head whenever I see comments and/or articles pointing at WTI and Cushing inventories as "proof" of oil market manipulation.
    19 Apr 2011, 11:43 AM Reply Like
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