FACTS: per Aramco Financials (1) 2018 production avg 10 million/day (2) 2019 production thru Sept 30th avg 10 million/day. No cuts . . "FAKE SAUDI CUTS" . . . "Surprise !"

[Jabbar + 465]

Is "Saudi Surprise" cuts BULLISH or BULLDUNG ?

* Aramco 2018  oil production a steady 10 million barrels a day per Aramco released financials.  THATS A FACT.

* Aramco 2019 oil production thru 9 months 10 million barrels a day per Aramco released financials Nov 4th.  THATS A FACT

Where are the production cuts ? Are NONE.

Saudi Arabia say they will "sacrifice" and take the brunt of the new "Surprise Cuts".  BULLDUNG, THEY WILL NOT GO BELOW 10 million barrels/day.  

Let's look at the numbers.

Oil prices crashed as program trading algorithms linked to S&P  kicked in which made oil price follow the stock market down October 1, 2018.

The regular OPEC meeting scheduled for beginning of Dec 2018.

Saudi Arabia  average 2018 production up to this point steady 10 million barrels day. As soon as talks of additional cuts started Saudi Arabia pumped production up over 10.6 million barrels/day0ctober/November.  

OPEC used this inflated base (now 10.6) to calculate cuts.  In the end Saudi Arabia quota 10.3 million, that's  300k above their real average for the year 2018.

So Saudi Arabia said they will cut even more, down to 9.8 million.  That's where it should have been if used proper 10 million as base..  No sacrifice from Saudis. 

Iraq, Nigeria and Russia never complied.  Nobody in OPEC complies. 

Early Aramco IPO financial reported 2019 year-to-date production was 10 million/day. So never cut to 9.8. .  .  Liars.

After attack on Saudi Aramco facilities Saudi Aramco increased production up to 10.3 million/day. 

Then IEA projections for 2020 estimates increase of world production by 2.6 million/day on 2020. (Most 2020 increase from Norway, Brazil, U.S. and Guyana)

OPEC screwed. Now what do they do. 

So, Saudis needed to again convince world supply will not exceed demand and still get oil prices up for their IPO. How can they pull that off. 

So Saidos/OPEC leak rumors of  "additional cuts" and Saudis/OPEC promises enforcement of existing quotas for non complies Nigeria, Iraq and Russia.

How can  they protect Saudi production and get Nigeria, Iraq and Russia to comply with current quotas.

They're so clever.  

This is what they did.  

1.  Remember Saudis again production at 10.3 million. This is 300 thousand above their real 2018 and 2019 year-to-date average of 10 million/day,   So Saudi "new" cuts down to 10 million.  It's where they always have been .  .  . 10 million/day

2.   NEW RULE .  OPEC+ then decided why don't we say Condensate is not oil and does not count as oil production ! (This was Russia's brain storm) PERFECT !   now Nigeria, Iraq and Russia are in compliance. Condensate is oil just a higher API. Too funny. Even if you don't have enough Condensate to offset production  just call any crude Condensate.  Nobody knows. 

3.  OPEC meeting agrees on 500 thousand/day cut when present agreement ends in March and Saudi Arabia will  "sacrifice" (not) and cover most of 500 thousand. Those Saudis are so generous (not generous, just liars).

4.  In reality Saudis will only be cutting 2 or 3 hundred thousand from thier real average for 2018 and most of 2019 (per their IPO prospectus 2019 average was 10 not the 9.8 they said they were down to).   And now Saudis like Nigeria, Iraq and Russia don't include Condensate as "oil" production  per new rule , Saudis don't cut anything.  Never have.

Liar, Liar pants on fire. 

The only substantial cuts of oil production are Trump's sanctions on Iran and Venezuela.  

Remember how from January first thru May/June the oil prices went up as OPEC and the "expert" oil analyst all told us how tight the supply was. Well not all, there was one firm, Orbital Insight that said world inventory went up substantially, not down.  Orbital was right.  Prices went up because the "expert" analyst parrot the Saudi/OPEC talking points.  

Now Saudis/OPEC have their new plan ready to put in play next March if warranted and . . . . If traders and investors buy into their bull. 

Back in October I said bias to the upside going into and up to the IPO.  I'm out with nice gain. Looks like there is some more upside. Oil doesn't trade on fundamentals anymore. I'm still out, don't need every last penny.

Production is really the wrong measure to control inventory levels.  It should be exports.  

ALL SMOKE AND MIRRORS

HIGH API OIL (CONDENSATE) DOESNT COUNT AS PRODUCTION.  ALL OPEC NOW COMPLIES. 

Can't wait to see what developed in 2020.

The reality is Not One Investment Bank oil or commodity analyst will call the Saudis out on this fraud.  They will all "brown nose" Saudis proclaiming their great sacrifice and report tight oil conditions the first half of 2020.  

Edited December 8, 2019 by Jabbar