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Saudi Arabia Reduced Oil Output On Ample Supply

BySaxo Bank
AuthorSaxo Bank
Published 02/06/2013, 11:54 AM
Updated 03/19/2019, 04:00 AM

Saudi Arabia turned down the oil tap another notch during January to produce 9.1 million barrels per day compared with a July and August peak of 9.9 mbpd. The reduction was in response to lower demand, both from domestic and international consumers according to an industry source speaking with Reuters. The reduction last month follows a similar cut in December.

Spare Capacity
This reduction has resulted in the Kingdom's estimated spare capacity -- additional production that can be brought online within 30 days and sustained for 90 days -- reaching its highest level in more than 10 years. This could be viewed by some as bullish and seen as an attempt to drive prices higher by reducing the supply but considering Saudi Arabia's stated preference for a price in the 100 to 110 USD/barrel range we believe that they see a market currently looking well supplied.

Rising spare capacity should also help stem fears about geopolitical spikes and we view this data as another piece of news which despite the current upside momentum on raised growth expectations eventually could help cap further upside potential.
Saudi Oil Production And Spare Capacity

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