While the Saudi surge was a surprise, the kingdom contained itself to producing within its permitted quota, which as per the Vienna agreement is at 10.058mmbpd.
Perhaps just as concerning is that as a result of the vast gap between the self-reported Saudi production, and the far lower secondary sourced one, the official OPEC production number is now quite suspect: according to the cartel, in February, total production declined by 140kbpd to 31.958mmpd, however thwas number is driven by a Saudi number that is over 200kbps below the one reported by Saudi Arabia itself, and as such one can argue that in February total OPEC production actually rose if using primary source data.
Finally, the straw that broke the oil rebound’s back came from Kuwait’s oil minister, Issam Almarzooq, who said at the same time as the OPEc report was released that oil risks dropping to $45/barrel as a result of rising shale production, as well as other factors.
The result: WTI has tumbled following the OPEC report and Kuwait statement.
Erasing the entire OPEC production cut surge.
The ProShares Ultra DJ-UBS Crude Oil ETF (NYSE:UCO) fell $0.48 (-2.70%) in premarket trading Tuesday. Year-to-date, UCO has declined -25.90%, versus a 6.10% rise in the benchmark S&P 500 index during the same period.
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