Huge Shout-Out To Mike Filloon -- Thank You -- August 14, 2018

Filloon can be followed over at SeekingAlpha.

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Saudi Cuts Production

This is the third post regarding this Reuters story. For an earlier note on this article, see this post. I am posting this again, because of all the data points, from OPEC:

• this is from OPEC's monthly report -- OPEC's monthly reports shift like the blowing sand
• OPEC: lower demand for its crude oil next year as rivals pump more
• Saudi Arabia: eager to avoid a return of oversupply, has cut production
• OPEC: the world will need 32.05 million bopd from its 15 members, down 130,000 bopd from last month's forecast 
• 130,000 / 32.05 million = 0.4%
• OPEC prices topped out at $80 this year; have since slid to $73
• OPEC July production rose to 32.32 million bopd
• this is a "mere" 41,000 bopd from June as the Saudi cut offset increases elsewhere (other OPEC nations taking Saudi's market share?)
• OPEC: moderate demand growth next year
• demand to grow by 1.43 million bopd
• that's 20,000 bopd less than forecast
• a slowdown from 1.64 million bopd in 2018
• July: Saudi Arabia claims it cut production by 200,000 bopd to 10.288 million bopd

Bottom line: a lot of verbiage for not much change: when OPEC suggests demand will be 20,000 bopd less than forecast (just one month ago), one gets the feeling that there are a few princes behind a computer with too much time on their hands.

Bottom line: no matter how many times I look at Saudi's production figures, they always seem to be about 10 million bopd, never less, but not much more. More importantly, "they" always talk about production but never about domestic consumption which historically increases every summer (air conditioning demand) and will increase going forward under Prince Salman's Vision 2030.

Bottom line: parsing OPEC's monthly letters feels a lot like listening to Steve Liesman parsing "the Fed's" by monthly minutes.

Bottom line: by the way, if that is accurate that next year global demand will be 20,000 bopd less than forecast, that makes Williams County in the Bakken, a swing producer. Harold Hamm, alone, can increase / decrease production by that much electronically and remotely from Oklahoma. 

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How To Read Tea Leaves

From Your Essential Guide to Tasseography.