IEA, Bloomberg, Others: Saudi Not Able to Make Up Shortfall

Earlier today, in response to the news that 60 million bbls of oil was going to be released from worldwide strategic reserves, I wrote that that world was awash in oil. That was earlier to day.

Now, I see there is an article from Bloomberg that confirms what I wrote:

The supply addition comes at a time when refiners in the world’s biggest economy have more crude on hand and are importing less as demand for fuels such as gasoline and diesel is slipping, according to Energy Department figures. The National Petrochemical and Refiner’s Association criticized the decision to tap the strategic reserve as a political move that “makes no sense” and “will do nothing to benefit consumers.” 

The story continues:

“This is kind of a head-scratcher because we’re just not in a situation in the U.S. where we physically need more barrels to meet demand,” Blake Fernandez, an energy analyst at Howard Weil, said in a telephone interview. “This looks more like a perception move by the U.S. government and the Europeans to alleviate high crude prices.”

Earlier today:

The U.S. and 27 other nations pledged today to tap government-controlled oil inventories after civil war in Libya disrupted crude shipments and Saudi Arabia failed to persuade fellow members of the Organization of Petroleum Exporting Countries to plug the gap with increased output.

In other words, Saudi is NOT able to make up the shortfall, something I have said more than once in the past year.

This is the third release from strategic reserves. The first two were more like "real" emergencies.

IEA members have conducted coordinated releases of emergency stockpiles on two other occasions since the group was founded in 1974. The first was during the 1991 Persian Gulf War; the second was in the aftermath of Hurricane Katrina which slammed into U.S. refineries and offshore oil platforms in 2005.