Here Is OPEC Production Cut Table, And It Has An "Error"

Tyler Durden's picture

Shortly after the conclusion of today's Vienna meeting, OPEC released the following table which lays out the breakdown of what the current reference production level is by nation, as well as the proposed adjustment to get to a 1.2 million barrel per day reduction, as well as the "pro forma" production number that will be effective on January 2017.

Two quick observations.

As noted previously, Indonesia is no longer in OPEC after it "suspended" its membership, effectively giving it full right to pump as much as it wants relative to its most recent October baseline production level of 722K per the OPEC monthly book. The reason for Indonesia's departure, according to the Nigeria oil minister, is that it was "unable to contribute a large enough cut."

More notably, Iran was in such a rush to declare victory and state that it is the only nation to be allowed to boost production that someone forgot to check the math in the table, because the 90,000 upward adjustment appears to be an error: the country's Reference Production level of 3,975tb/d is actually well higher than the January production level of 3,797tb/d. However, for political and optical purposes, it was meant to give Iran a domestic "victory" over the Saudis, by giving Iran leeway to announce it was the only nation to be allowed to boost production in the face of Saudi opposition, when in reality it appears to have been a math glitch.

However, even more notable is that if one compares the OPEC production level per the "deal" relative to January output, is that total production appears to be higher by over 800,000 barrels. Keep in mind that both Libya and Nigeria are set to boost production higher, potentially to 1mmb/d and 2mm/d respectively, and expanding total OPEC production back over 33mmbpd in just a few months. This happens at a time of modest seasonal production reduction by the Saudis and modest cuts by other members, while the exempt nations are ramping up.

One wonders how long until the market does this math and realizes that basically the strategy since February was to jawbone prices higher, ramp up throughout and then adjust to seasonal levels in January 2017 and call it a cut?

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The_Juggernaut's picture

Like they can actually make an agreement and stick to it while the US can make up the difference on any cuts in production.  It amazes me that anyone listens to these clowns.

Pinto Currency's picture

Supply of paper vs supply of real goods is driving.

NotApplicable's picture

If only computers could do maths...

EmmittFitzhume's picture

It's all about short term profits in buying and selling oil contracts.  It's really a no brainer. The say they will cut and futures go up. They renege and futures go down. Seemingly 100% of the time.  

adr's picture

That is because computers are stupid and can easily be manipulated 100% of the time.

Since computers make up 99.99% of trading volume that means the markets are manipulated 99.99% of the time.

GadExp's picture

Logic Flaw:

 

"Can easily be manipulated" is not the same as "ARE manipulated".

 

Lucky for you, even with flawed logic, you still somehow arrived at the truth....

 

"The markets are manipulated 99.99% of the time."

 

Here's a more logically sound way to arrive at the truth.  

1. Computers can easily be manipulated 100% of the time.

2. Dishonest fetcher bankers control the financial system computers 100% of the time.

3. The dishonest fetcher bankers are willing to lie, cheat, and steal for their personal gain 100% of the time.

4. Computers make up 99.99% of trading volume.

 

Thus..."The markets are manipulated 99.99% of the time."

KnuckleDragger-X's picture

In the history of OPEC production quota's, The Saudis are always the first to cheat, but the are facing stiff competition from the Iranians this time.....

Slurm's picture

blah blah blah

 

Wake me up when the shit show is over.

InsaneBane's picture

Who gives a flying fuck, OPEC is dead. So is the $erpent dollar..

http://oilprice.com/Energy/Crude-Oil/OPEC-Is-Dead-Whats-Next.html

Bill of Rights's picture

Higher borrowing rates, Higher Oil, this is gonna be epic lol...

hankwil74's picture

Perception is reality

Kefeer's picture

Until one dies; then misperception becomes a hellish reality for many.

adr's picture

Clintonian math.

Producing more at a period than you did the previous year is somehow a cut.

Record output at any time in history other than a few select months in 2015 and 2016 is somehow a massive production cut that allows oil to rise from $26 to $50+

BULLSHIT.

I don't think there is a brain left in the financial world.

RopeADope's picture

"When it becomes serious, you have to lie"

exartizo's picture

Classic Saudi/Iran grudge match "tit for tat" childish children's game from two potential WW3 adversarial candidates.

Luckhasit's picture

Say what you want but Saudia Arabia knows how the game is played, market price wise.  You talk the prices higher (since its aglo that determines the price) then get everyone excited about a cut in production.

While in reality, oil consumption has slowed to a glacial pace.  As it stands, I reckon that SA knew about the drastic drop in consumption and played the game to gain market share, thereby saving thier revenues. 

Meanwhile, how full are the worlds oil holding farms, the brim?  Yea, this will end well.

Kefeer's picture

So much slow down that the tankers running around the world have been full and come back empty without a port stop.  Think about the largest garbage dump on the planet.  Hint: It covers over two-thirds of the earth.

Knave Dave's picture

Will believe OPEC made a difference and became relevant in its old game of price fixing again ... when I see it. This wasn't a deal. It was an agreement to strike a deal like this in a few more days, but there still remain talks with non-OPEC members. Why? Kind of implies that this deal is contigent on how the next few days go; but, hey, saying you're going to strike a deal is good enough to get prices up for now so that, when they fail to lock in the deal, prices have a higher starting point for their fall so that (hopefully, in the oil baron's mind) they will land at a higher level, too.

Grandad Grumps's picture

Is it true that the oil fields continue to fill up from below?

SweetDoug's picture

'
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We've got these really neat things, you may have seen them? Kompooters? They're supposed to be really very good at the plus and the minus business.

I even hear they have this 'software' called "spread sheets" where you can perform all sorts of this plusing and minusing.

The head choppers should get some of this stuff, and put away the stones and bowls.

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