(Bloomberg) -- Saudi Arabia boosted crude production to the highest in three decades in March, with a surge equal to half the daily output of the Bakken formation in North Dakota.
The kingdom boosted daily crude output by 658,800 barrels in March to an average of 10.294 million, according to data the country communicated to the Organization of Petroleum Exporting Countries’ secretariat in Vienna. The Bakken formation, among the fastest-growing shale oil regions in the U.S., pumped 1.1 million barrels a day in February, according to data from the North Dakota Industrial Commission.
Oil prices have rallied about 16 percent in New York this month on stronger fuel demand and as a record decline in U.S. rigs fanned speculation that the nation’s production will slow from its highest pace in three decades. Prices collapsed almost 50 percent last year as Saudi Arabia led OPEC in maintaining production in the face of a global glut rather than make way for booming U.S. output.
“It confirms the new strategy of the Saudis,” Giovanni Staunovo, an analyst at UBS AG in Zurich, said by e-mail. “If OPEC isn’t balancing the market any more, why should the Saudis hold so much spare capacity when they can use it to make money? Production is still likely to increase in the near term as domestic demand will increase.”
In the space of 31 days, Saudi Arabia managed a production boost that took drillers in North Dakota’s Bakken almost 3 years to achieve, according to data compiled by Bloomberg. Output from the Bakken shale increased by about 668,000 barrels a day from February 2012 to December 2014, according to data from the state’s industrial commission.
The increase reflects Saudi Arabia’s own growing requirements rather than an attempt to defend market share, according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
“It’s a big jump in Saudi production but it is commensurate with the increase in their domestic needs,” Tchilinguirian said by e-mail. “Saudi Arabia has made large capacity additions in refining, and they’ll probably want to build up crude stocks before demand from local utilities peaks in the summer.”
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