Saudi Arabia can pump much more oil

An oil tanker is being loaded at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed

LONDON(Reuters) – The leader of Saudi Arabia has assured U.S. President Donald Trump that the Kingdom can raise oil production if needed and the country has 2 million barrels per day of spare capacity that could be deployed to help cool down oil prices to compensate for falling output in Venezuela and Iran. In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase output by up to this amount, although a subsequent statement from the White House rowed back on this assertion. Either way, the kingdom, OPEC’s biggest member, can barely raise output by 1 million bpd to 11 million bpd and even that would be difficult, according to industry analysts who forecast a further oil price rally due to a lack of new supply.

Reuters Graphic

“We are seeing another strong signal from the two of the world’s three largest producers to cap the price upside in oil. With Russia agreeing to this we are seeing political interference in the setting of oil prices on the rise. Saudi Arabia agreeing to such a request basically raises the risk that OPEC has played out its role with Saudi, Russia and the U.S. are now setting the agenda.” “In the short-term, however, a busy night on Sunday can be expected, with traders and funds getting caught on the long side. Not least in WTI, where we saw a collapse in the gross short last week while the net-long jumped by 25 percent and the long/short ratio hit a 7-year high.” “Prices are likely to become more volatile over the coming months, caught between two narratives: Oversupply concerns and dwindling spare capacity/oil market tightness concerns.” Nick Bit: I want to be clear here. The world which is slipping into a recession cannot stand oil at these levels. It has been decided they will FOR SURE bring the oil price lower much much lower. And i want you their for this coming oil bust. This is a BIG trade and i want you in it call me!