Is Saudi Arabia Lying about Its Oil Inventories?

Oilprice.com ^ | 09-11-2017 | Irina

[bananaman22]

Saudi Arabia’s reports about declining crude oil inventories were instrumental in the buildup of trust on the market that OPEC’s—and the Kingdom’s specifically—efforts to rebalance crude oil’s fundamentals were working. Now, a satellite imaging company, Orbital Insights, is challenging these reports, suggesting that OPEC’s leader may have well been lying to get prices higher.

While this would not exactly be a surprise, it would throw a stone in the quiet waters of the official OPEC narrative that has played a lead role in several oil price rallies so far this year. And here’s the size of this stone: Orbital satellite data suggests that Saudi Arabia’s crude oil inventories have risen slightly since early 2016—not dropped. A slight rise in itself would normally not be a big deal, but Riyadh has been reporting declines in inventories over this period, to the tune of some 70 million barrels.

[RayChuang88]

But what it has done is turn the supposedly impossible-to-extract Marcellus Formation into a major natural gas resource. States like Ohio, Pennsylvania and West Virginia are making a lot of money from getting that natural gas in the western part of that Shale.

No wonder the USA has such a huge surplus of natural gas--it is rapidly displacing coal as the primary fuel for electric power plants.