Will OPEC’s Crude Oil Production Fall after Its Meeting?
OPEC’s crude oil production
The EIA (U.S. Energy Information Administration) estimates that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production rose by 270,000 bpd (barrels per day) to 33,120,000 bpd in October 2016—compared to the previous month. OPEC’s crude oil production is at the highest level in the last eight years. Its production rose due to the rise in production from Iran, Iraq, Nigeria, and Libya.
OPEC’s crude oil production rose in October despite its historic deal on September 28, 2016, to cap production. Details of the action on this deal should be released at OPEC’s November 30 meeting. For more on OPEC’s meeting, read Part 1 and Part 2 of this series.
For more on oil producers’ previous meeting, read Crude Oil Prices and Oil Producers’ Meeting in Istanbul and Decoding the Major Oil Producers’ Meeting in Algeria.
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EIA’s crude oil production estimates
The EIA estimates that OPEC’s crude oil production will average ~33,140,000 bpd in December 2016. OPEC’s rising crude oil production, despite its agreement to cut or cap production, could have a negative impact on crude oil prices. Lower crude oil prices will have a negative impact on oil producers such as Matador Resources (MTDR), PDC Energy (PDCE), Chevron (CVX), SM Energy (SM), and Bonanza Creek Energy (BCEI).
The ups and downs in crude oil prices also impact ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the Direxion Daily Energy Bear 3x (ERY), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the Fidelity MSCI Energy (FENY), the VelocityShares 3x Long Crude Oil ETN (UWTI), and the United States Brent Oil ETF (BNO).
Impact on oil producers
OPEC didn’t cap its production at its meeting on June 2, 2016. Its next meeting is scheduled for November 30, 2016. Read Will OPEC Successfully Implement Its Production Cap Plans? and What Will Happen if the Oil Producer Meeting Succeeds? to learn more. For the latest updates, read Part 1 of this series.
For more on crude oil prices, read Saudi Arabia: Weather Will Be a Key Demand Driver of Oil in 2H16 and Winners and Losers in Energy after the US Election Results. For more on crude oil price forecasts, read Will Crude Oil Prices Test 3 Digits Again?, Will Crude Oil Prices Hit $20 per Barrel?, and Major Banks Downgrade Crude Oil Prices despite OPEC’s Deal.
For related analysis, visit Market Realist’s Energy and Power page.