The consumption numbers I’ve seen show the US now about flat year over year, but markets have been telling us there’s been an inventory liquidation in progress. The contango in crude has recently come in some, but remains at what is probably ‘full carry’, and last I checked WTI was below Brent.
The gasoline contango has also narrowed, and the RBOB crack is moving out to near zero from trading quite a bit negative for a while.
Jan 12 (Reuters) — Top exporter Saudi Arabia plans to cut oil output by up to 300,000 barrels per day below its agreed OPEC target — a proactive step to prop up a collapsing market, industry sources said on Sunday.
OPEC’s most influential member has lowered supply this month to 8 million bpd, meeting its target under OPEC’s pact to reduce overall production by a record amount from Jan. 1.
But strict Saudi discipline has failed to boost oil prices–which at close to $40 are far from the $75 a barrel named by Saudi King Abdullah as a fair price. So Riyadh is prepared, from February, to go beyond what is required by OPEC, the sources said.
“We’ve been told Saudi Arabia will cut to about 7.7 million in February,” said a senior oil executive. “They want to prevent a huge stock build up and a further decline in the oil price.”
The kingdom had increased production unilaterally to about 9.7 million bpd in August last year to calm an oil market that had shot to a record of nearly $150 in July.
But by February, it will have reduced its supply to world markets by a fifth as recession steadily erodes demand for fuel.