Saudis Increase Production -- Oilprice; Saudis Cut Production -- Bloomberg -- August 6, 208

Updates

Later, 10:32 a.m. CDT: someone noted the same thing I did -- something fishy going on over in Saudi Arabia.  

Saudi Arabia may have started to fill up its oil tanks, export and domestic consumption data suggests.

Traditionally, the summer months are the season of peak local consumption of crude, Lee notes, as air conditioning demand hits a high. However, this year temperatures have been below the five-year average for the period, and exports have not registered any marked increases, either.

Saudi Arabia has abundant storage capacity and over the last three years, stockpiles have been falling, from more than 300 million barrels to less than 250 million barrels. At the end of April this year, they stood at the lowest level since 2011, but in May they went up for the first time since last November.

They may well have continued to rise in the following months as well. At the same time, Reuters cited two unnamed sources from OPEC as saying Saudi crude oil production in July fell by 200,000 bpd instead of rising, as per the OPEC+ agreement from June 22.

This is a surprising turn of events after Saudi Arabia assured importers that India and the United States it would ramp up production quickly and solidly.

Original Post

 I posted this barely 72 hours ago; posted Friday; it's now early, early Monday:

Saudi Arabia nearly sets all-time production record. Yawn. How many times have we heard this story. 

The kingdom’s oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day. This is just shy of an all-time peak reached in 2016, according to a Bloomberg survey of analysts, oil companies and ship-tracking data.

Did you get that? Oilprice reported that Saudi Arabia produced at record levels in July, 2018, to 10.65 million bopd.

Now, today, from Bloomberg:

Saudi Arabia, which recently pledged oil-supply increases to tame rallying crude prices, cut production last month, according to OPEC delegates familiar with the matter.

The biggest member of the Organization of Petroleum Exporting Countries pumped 10.3 million barrels a day in July, according to the delegates, who asked not to be identified because the data is private. The kingdom told the cartel it produced 10.489 million in June.

The cutback comes despite promises from Saudi Energy Minister Khalid al-Falih that key OPEC members and their allies would add about 1 million barrels of supply, doing "whatever is necessary to keep the market in balance." Under pressure from U.S. President Donald Trump to reassure markets, the kingdom was said to have been preparing to pump 10.8 million or 11 million barrels a day.

The lower number follows signs that the Saudis couldn't ultimately find buyers to justify pumping at record output levels. U.S. crude futures lost more than 7 percent in July, their steepest drop in two years, amid signs that a surplus is re-emerging in some parts of the world market. There are growing fears that the trade war between the U.S. and China could impair demand.

What's most interesting about this is not production required for export, but production required for domestic consumption:

• Saudi oil consumption goes up significantly in the summer; provide electricity for a/c
• Vision 2030 requires increased oil for refining

To see a Saudi cut in production in July is quite interesting. Especially after we just told that production actually increased.

For newbies, there is nothing new here, nothing to see.

This is what is going on: there are two sources for information coming out of Saudi Arabie --

• the government's official statistics
• the anonymous sources from those who actually know what's going on

 The bottom line: Saudi Arabia pumps somewhere between 10 million and 11 million bopd. A number below 10 million will not occur and a number above 11 million will get everyone's attention.