Saudi production increased marginally for January, and all indications are net demand is holding up at the higher prices.
While this bodes for continued price hikes, markets may have likely sold off on the news, believing the higher production is a sign of a proactive supply increase that will drive prices down.
It’s the difference between getting your offer lifted vs your bid hit. Saudi (and Russian) offers are clearly getting lifted.
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This means Saudis/Russians will continue to be price setters for at least the next few quarters.
IEA Lifts 2008 World Oil Demand Growth Forecast
By Reuters | 14 Dec 2007 | 05:32 AM ET
World oil demand will grow more quickly than expected next year fueled by the Middle East and proving resilient to record-high prices, the International Energy Agency said on Friday.
The IEA, adviser to 27 industrialized countries, said in its monthly Oil Market Report that demand will rise by 2.1 million barrels per day (bpd) next year, up 200,000 bpd from its previous forecast.
“A lot of this demand is in the non-OECD countries, where we don’t have any downgrades in economic growth forecasts,” said Lawrence Eagles, head of the IEA’s Oil Industry and Markets division.
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