sjn wrote:Robert, I seem to recall you predicting that SA would increase production over the summer in response to falling inventories. We haven't seen this. What has happened is SA has increased internal consumption, while maintaining production levels, hence reducing exports. I think it's too soon for you to feel vindicated.
Your recollection is slightly off. I said that if we pulled down crude inventories, I would expect that Saudi would be called upon to produce more. But we stayed at record-high crude inventory levels all summer. Now, in that case, if the price starts to climb, they also have an incentive to pump more, and I said that was something else that could cause them to pump more. So, in response to the price climbing (and staying) into the > $80 range, they argued in favor of a production rate increase at the last OPEC meeting, and there are already reports from Asia that refiners there have been told that they would be getting more crude.
So, given that to this point things have gone exactly as I predicted, why on earth wouldn't I feel vindicated? I said Saudi production would flatten out, and it did. I said that they would be called upon when inventories fell or price rose, and they were. And they are responding.