Super interesting graph from the EIA.

What strikes me the most is the lag between production increases/decreases and the change in oil prices.

For instance in 2009 they cut their production by over 3m b/d. The prices went up at the end of the year with a lag of a few months.

This is something important about oil price action, not only in regards to Saudi Arabia but for oil production data analysis in general: the changes in production have an impact on oil prices with a decay. Indeed, inventories and suppliers contracts are great balancing factors that smooth even the most abrupt change in production.

  • What we can takes from this observation concerning the current situation?

Remember that Saudi Arabia increased its production pre-OPEC deal to a historical high:

123Red arrow: November 2016

We should see the consequences of this increase until Q2 2017.

Moreover, the large drop in production post-OPEC deal should not have a lot of influence on prices until Q2-Q3 2017.

I mention this observation on the decay between production and prices in: How to Trade Crude Oil – Oil Trading Method: General Approach, Tips and Basics Check-List