OPEC’s Crude Oil Production Is Vital for the Oil Market
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 fell by 210,175 bpd (barrels per day) to 33.5 MMbpd (million barrels per day) in December 2016—compared to the previous month. Production fell 0.6% month-over-month, but rose 4% year-over-year.
Monthly production fell due to the decrease in production from Saudi Arabia, Iraq, Nigeria, and Venezuela. The fall in OPEC’s production will support crude oil (BNO) (PXI) (USL) (ERX) (USO) (UCO) prices. Higher crude oil prices will have a positive impact on oil producers such as Matador Resources (MTDR), SM Energy (SM), and Bonanza Creek Energy (BCEI). For more on crude oil prices, read Part 1 in this series.
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OPEC and historic production cut deals
OPEC’s crude oil production hit a record 33.7 MMbpd in November 2016. Listed below are the historic production cut deals for OPEC and non-OPEC producers since September 2016 to support oil prices.
- oil producers’ meeting in Istanbul
- major oil producers’ meeting in Algeria
- OPEC’s production cut meeting on November 30, 2016
- OPEC and non-OPEC producers’ production cut meeting in December 2016
EIA’s crude oil production estimates in 2017
OPEC’s crude oil production averaged ~31.7 MMbpd and ~32.8 MMbpd in 2015 and 2016, respectively. The EIA estimates that OPEC’s crude oil production will average ~33.2 MMbpd in 2017 and ~33.7 MMbpd in 2018. Higher OPEC production could pressure crude oil (FENY) (SCO) (BNO) prices in 2017. However, OPEC’s production is expected to be ~32.5 bpd in January 2017 due to the production cut deal. Read What Will Happen if the Oil Producer Meeting Succeeds? to learn more. The expectation of OPEC’s slowing crude oil production could have a positive impact on crude oil prices in 2017.
In the next part of this series, we’ll analyze how US crude oil production impacts crude oil prices.