[Plantagenet]

$this->bbcode_second_pass_quote('Lore', '')$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Lore', 'W')e've already bounced back from the lows to around $87/barrel today.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'C')apacity? What is that? OOIP? Resources? Stated reserves? Probable reserves? Possible? Improbable Reserves? Undeclared Immeasurable Reserves? Who measures Capacity? Houdini?
How many times have we gone over this?

[evilgenius]

It makes sense to believe that producers will throttle back production and raise prices in a falling price market, but that is not guaranteed. When countries such as SA or Russia have uni-dimensional economies in which they must produce oil in order to have any money at all to run their operations they can fall into the trap. For them it is cheaper to produce at a loss for a time than to incur the cost of re-inventing their economies/political power bases. If it goes on long enough it is still cheaper to start throwing various outlying groups under the bus than to change the basic way things are done. If this happens I would be watching out for an increase in domestic turmoil in such producing countries. Things could even get so bad that old allies like SA would be tempted by any legitimate offers to bring change to the situation and begin to think in terms of joining political blocs other than the monolithic imperial one to which they belong now.

[monsta666]

I could be wrong about this but to me spare capacity entails that a country can bring on oil supplies within 30 days (this part of the definition prevents countries/companies including fields currently being developed into spare capacity) and then maintain this new level of production for at least 90 days (this 90 days limit insures a country cannot tap its strategic reserves or other storage and claim that is its spare capacity).

For a long time I had doubts whether Saudi Arabia had any significant spare capacity but today I am inclined to believe they have some. However this spare capacity is not nearly enough to bring oil prices down. If Saudi Arabia could force prices down then they would have done so. High prices have a terrible effect on the global economy and if it is high enough it will create another financial crisis. They know full well about this and will do whatever they can to prevent this. However they do not have the capacity to bring oil down to $75 nevermind $50. Those prices will not be reached unless the global economy goes into another tailspin.

[rangerone314]

Its possible that Obama is promising to support Saudi Arabia against Iran militarily in exchange for lower oil prices. The Saudi's may figure that a nationalist war against Persians would rally their people to make up for less oil-funded social programs.

[SeaGypsy]

That is almost the opposite of the truth. Obama doesn't want low prices, he wants the US oil industry to be able to compete; something it can't do under about $80bbl. That still leaves almost nothing for refiner margins. Or tax. $100 is the basic new normal and that's the way it's going to stay for a while yet.