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This Wednesday, May 9, 2012, file photo, shows a drilling rig near Kennedy, Texas. U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world's biggest producer.
This Wednesday, May 9, 2012, file photo, shows a drilling rig near Kennedy, Texas. U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world's biggest producer.
(Eric Gay/The Associated Press)

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Saudis cheer as oil markets fracture along regional lines

Another bearish signal for the oil market is coming from Saudi Arabia. The Middle Eastern nation has reduced its output by almost 1 million barrels per day (bpd) since a high point in June of 10.1 million bpd.

Saudi Arabia is nervous of an emerging glut, fed by rising production in North America, the rapid recovery of oil supplies from Libya and the emerging oil colossus in neighbouring Iraq. This is a pre-emptive strike against bearish market sentiment – the news that daily output had been reined in to 9.025 bpd from 9.45 million bpd in November helped to lift the Brent crude price above $113 on Thursday but this morning it subsided again to $111.