Monday, February 6, 2017

Saudi Arabia Foreign Exchange Reserves Continue To Drop -- February 6, 2017

Wow, I love it when a story comes together or the dots connect.

Earlier this evening, a reader sent me a link to a Bloomberg article: US east coast has a growing appetite for foreign oil. I responded by saying Saudi Arabia must really be undercutting the price of Bakken to make those deals. That's fine with me if Saudi Arabia wants to continue draining their foreign exchange reserves by giving their oil away.

I was curious if that data point - Saudi Arabia's foreign exchange reserves -- has been updated.

First, note the previous post on this subject. At the link, note the projection for December, 2016 (at the bottom of that post).

Now, let's turn to more recent data; data for December, 2016, has just been posted.

Again, it's hard to read the graph, but, it appears:
  • October, 2016: 2,040,000 million SAR (conversion, 1.00 SAR = 0.2666 USD) = $543,864 million
  • November, 2016: 2,020,000 million SAR = $538,532 million
  • December, 2016: 2,010,000 million SAR = $535,866 million 
  • Projection, at the same pace, the January, 2017, will drop below 2,000,000 million SAR (or come close)
  • November - October: decline of $5.332 million = $5 billion decline, month-over-month;
  • December - November: decline of $2.666 million = $3 billion decline, month-over-month;
John Kemp recently estimated Saudi Arabia was hemorrhaging $7 - $9 billion/month which seems to be in the ballpark of the above figures.

If the "$3 billion" figure is close, the decline in monthly foreign exchange reserves has dropped off markedly. But it's still not a pretty picture.

Diclaimer: I often make simple arithmetic errors. Reading these graphs is very problematic. There are numerous places I could have made errors.

I assume John Kemp will soon be updating his own figures. If I see them, I will post them.

Eastern Canadian Crude Oil On Its Way To China
Due Partly To A Shrinking Middle East Supply -- OPEC-Led Production Cuts

Platts is reporting:
  • first-of-its-kind voyage: into the Caribbean and then on to China
  • mostly likely via a VLCC
  • 710,000-bbl cargo; 30.56 API, 0.28% sulfur
  • will likely be co-loaded with Venezuelan extra-heavy sour crude Merey (16 API; 2.45% sulfure)
  • unique arbitrage due to
  • depressed shipping rates
  • Brent's narrowing premium to benchmark Dubai
  • a shrinking Middle East supply due to OPEC-led production cuts

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