Saudi Arabia has stood the test of time – once again. When crude markets felt stretched and indeed on edge, for a host of reasons including the outage in Libya and the anticipation that any strike on Damascus may cause the crisis to spill over, Riyadh stepped in and opened the taps. The Kingdom increased its crude exports by 155,000 bpd in July from June to 7.470 million bpd, the Joint Data Initiative (JODI) showed. Saudi Arabia produced 10.034 million bpd of crude, up 392,000 bpd from June, the data showed. And as per the IEA, Saudi Arabia has pushed output to 10.2m barrels a day in August, the most in IEA records. Kuwait and the United Arab Emirates outputs also hit high levels, setting records for output this summer, at around 2.8 million bpd.

In August these three large Gulf producers met 17.1 percent of global demand. In thirty years of IEA data, their share has not topped 18 percent.

And on the back of this surge by Riyadh, Abu Dhabi and Kuwait, the OPEC is now projected to increase its crude shipments further by 1.4 percent through to early October, tanker tracker Oil Movements said. Accordingly OPEC was expected to raise exports by 320,000 bpd to about 23.9 million a day in the four weeks to October 5 compared with the period to September 7, the report added.

But with geopolitics cooling down, somewhat, the markets are slowly getting back to norm. The Fed fuelled rally over the week is now subsiding.

Fundamentals, slowly and gradually, are getting back in into stride.

Oil prices stalled Friday, as the week that saw the contract lose more than 2 percent, came to an end. Bearish sentiments overlapped the markets as they assessed crude demand prospects once the news that the US Federal Reserve announced world’s largest economy isn’t yet strong enough to withstand the withdrawal of monetary stimulus, sank in.

October crude oil fell $1.72, or 1.6 percent, to $104.67 a barrel on the New York Mercantile Exchange on Friday, giving back a chunk of Wednesday’s 2.5 percent climb following the Fed’s generally unexpected decision to keep the pace of monthly bond purchase at $85 billion. Wednesday’s rally was also seconded by a bigger-than-expected drop in US crude stockpiles.

That was the lowest settlement since Aug. 21. The losses on the more heavily traded November contract were smaller, at 1.1 percent. This was the second consecutive losing week for NYMEX crude, which posted its biggest weekly loss – of 3.3 percent – since the end of June.

Crude oil futures were reported higher, earlier on Thursday, after the Federal Reserve left its asset-purchasing program unchanged. The rally, the biggest in more than three weeks, came after the Federal Reserve said it would keep its bond-buying program in place, alleviating concerns that the central bank would begin to roll back a measure that has helped boost crude prices.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar. Prior to the announcement, many economists expected to see a small reduction in the pace of bond purchases, a measure that has helped oil prices in recent months by weakening the dollar.

The US Energy Information Administration report on Wednesday underlining that the US crude oil stockpiles dropped by 4.4 million barrels in the week ending September 13 to the lowest level since March 2012, far more than the expected 1.2 million decline, after a 0.2 million barrel fall in the previous week, also helped the markets spike on the day.

But with fundamentals, continuing to be weak, markets could not remain oblivious to the gathering clouds. Crude prices had already started to lose the streak, once the US and Russia agreed on terms to dismantle Syria’s chemical weapons cache. The geopolitical ‘fear premium’ thus began winding down.

And also impacting the global markets sentiments is the fact that the world is beginning to carve out a more efficient future for itself. This is going to have a long-term impact on the global crude consumption patterns, at a point in time, when shale revolution is beginning to flood the pipelines and trains wagons – not only in North America – but elsewhere too.

Oil demand is under threat. And not only in the transportation sector – as many have been envisaging for some years now – but in other sectors too. More efficient internal combustion engines, to meet the tighter output controls are indeed changing the oil consumption patterns of vehicles and airplanes. But reports pouring in from other sectors too is interesting – to say the least.

Maine is the most heating-oil dependent state in the US, but figures released Thursday by the US Census show its use here continues to wane: 67.5 percent of homes relied on oil for their primary heat source in 2012, down from 69 percent in 2011 and 80.2 percent in 2000, a report in Sun Journal by Kathryn Skelton said.

Industry officials point to a mix of increased efficiency and trying to avoid oil’s volatile, rising prices as factors behind the trend. News of the decrease came as Efficiency Maine announced a new program with $6.2 million in rebates to entice Maine homeowners into new energy projects. It could save, collectively, 630,000 gallons of heating oil a year, according to Executive Director Michael Stoddard. He hopes 3,500 homeowners take part in the new Home Energy Savings Program.

In addition to using less oil, numbers also show homes that burned wood, which includes pellets, increased to 13.7 percent in 2012 - up from 12 percent in 2011 and 6.4 percent in 2000.

The world still remains dependent on Saudi Arabia and other OPEC players to meet its needs, no one is arguing that at the moment. But there are spanners in work too. Global demand pattern is still not well defined.

There is a growing concern within the energy fraternity of a dual blow – collapsing demand and exploding production.

Would any producer be tempted to keep a spare capacity of roughly around 2 million bpd in the emerging scenario – and at a cost? There is a buzz around – in the global energy press – on the issue.

Spare capacity comes at a price – and indeed an exorbitant one. It is needed, yet there has to be an economic feasibility to support this expensive venture. There has to be a business justification.

After all, economics rules the world of politics too!