Saudi Crude Output Falls 11.3% In 2009 Vs '08 -Ctrl Bk

[phantom power]

RIYADH (Zawya Dow Jones)-Saudi Arabia's crude production fell 11.3% to 2.9 billion barrels in 2009 from 3.4 billion barrels in the year earlier, while exports fell 14.4% to 2.3 billion barrels, the country's central bank said Sunday.

http://professional.wsj.com/article/BT-CO-20100926-703149.html?mod=WSJ_Energy_middleHeadlines&mg=reno-wsj#printMode

[LiberalLoner]

1. As goes Saudi Arabia, so goes the rest of the oil producing world.

Peak oil, anyone?

[FBaggins]

6. Nope. In fact it's almost exactly the opposite.

They're the swing producer.

[LiberalLoner]

7. Oh....hmmm...well, I had just read somewhere about peak oil, that it was important to

watch what happened to Ghawar especially in Saudi Arabia and then the SA oil production in general because that would really tell us when the peak was hit and we were going to the other side of Hubbert's Curve. So I remembered that today (can't remember where I read it, somewhere on the internet) and it felt kind of ominous to see those numbers.

[FBaggins]

8. The problem with Peak Oil theories...

...is that they can be adjusted to fit just about any situation.

The Saudis have (for many years) virtually all of OPEC's excess production capacity. Meaning that they have the ability to produce significantly more than they elect to in any given month. Because of this, you can't tell whether a given increase/decrease is due to their choice to produce less (to support prices), or because they can't produce more (due to peaking).

A PO theorist will see peaking in virtually any decline - regardless of other information. In this case, other OPEC nations have been exceeding their quotas and increasing production (Iran comes to mind), and the Saudis have been cutting production to keep that "cheating" from slamming price levels overall. Recent analyst takes on the market indicate that we'll see more of this in months to come. Stockpiles are large enough to make peak production claims impossible to prove - the demand side is still driving this bus.

As we stated two weeks ago, the only real solution for the current high level of crude oil and product inventories is a production cut by Saudi Arabia. Saudi Arabia in August cut its production slightly by 0.1% and Nigeria's production fell by 1.5%, but Iran and the UAE boosted their production respectively by +0.5% and +0.4%, thus causing overall OPEC production in August to be virtually unchanged. Crude oil prices have so far only traded on a mildly bearish note, meaning the more recalcitrant members of OPEC feel no urgency to cut production at present. However, Saudi Arabia, as the swing producer in OPEC will have to take early action to cut production in coming weeks or risk a breakdown in oil prices.

http://www.insidefutures.com/article/176013/Futures%20Outlook%20-%20September%2017,%202010.html

[LiberalLoner]

10. Thank you! You explained this in a way that's easy for me to understand. I appreciate that. I am

still pretty worried about peak oil and all its implications though. I mean I guess this isn't as worrisome a sign as I'd thought, but I still wonder what is going to happen in the next decade or two or three. I'm hoping for the best but fearing for the worst. I think we are in kind of a bad situation here in America because we have such vast distances between things, with the suburbs and towns spread out so far apart and hardly any mass transit and the railroad not doing so well either.

[zipplewrath]

2. Why?

Are they controlling supply to control prices? Or can they not pump it as fast anymore?

[phantom power]

3. A drop of that magnitude yoy is a response to decreased demand.

Symptom of a crappy world economy. My wild-assed prediction is that the economy is currently masking a more fundamental inability to produce at substantially higher levels than 2005.

The utter lack of transparency in the oil industry makes it hard to know.

[zipplewrath]

4. My guess too

They've been managing supply for years in order to influence prices.

[GliderGuider]

5. Welcome to Export Land, we hope you enjoy your stay...

From the article:

"Average local consumption of oil and gas grew 5.9% in the past five years, the governor said.

"Domestic consumption of oil and gas is posting continuing growth and at high rates...this requires looking into the reasons behind the increase in oil and gas consumption and working on rationing it," Jasser added."

Oops...

Combined with falling output this is not a good sign.

[4dsc]

9. Notice the BS as the end

They claim "Proven oil reserves at the world's top energy exporter were steady at 264.6 billion barrels at the end of last year".

Its odd that the Saudi's have produced about 90-100 billion barrels of oil since the 1980's and this numbers never changes.