An
oil
price
of $125
a
barrel
didn'
t
reflect
the
level
of
spare
production
capacity
available,
and
Thursday'
s
downward
correction
better
reflects
market
fundamentals,
says
Bernstein
Research.
At the end of March, OPEC's
effective spare capacity was around 4 million barrels a day, but the price of
Brent crude implied the supply cushion was less than half that size, it says.
Although
some people in the market do not believe OPEC kingpin Saudi Arabia could really
produce an extra 3.5 million barrels a day if necessary, all the evidence
suggests, "that the much debated Saudi spare capacity is more real than
not," it says.