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OPEC, Russia, and the US Will Impact Crude Oil in 2017

PART:
1 2 3 4 5 6
Part 5
OPEC, Russia, and the US Will Impact Crude Oil in 2017 PART 5 OF 6

Will Russia’s Oil Production Impact Crude Oil Prices in 2017?

Russia’s oil production 

Russia is the largest crude oil producer in the world. Russia’s crude oil production was flat at 11.21 MMbpd (million barrels per day) in December 2016—compared to the previous month, according to the Energy Ministry of Russia. Russia’s crude oil production peaked at 11.41 MMbpd during the Soviet Era in 1988. Russia has been the world’s top crude oil producer for the tenth consecutive year. Near-record production from Russia could pressure (BNO) (PXI) (USL) (ERX) (ERY) (IEZ) (IYC) crude oil prices. For more on crude oil prices, read Part 1 of the series.

The EIA (U.S. Energy Information Administration) estimates that Russia’s crude oil and other liquid production was flat at 11.45 MMbpd in December 2016—compared to the previous month. Market surveys estimate that Russia’s oil and gas condensate averaged 11.1 MMbpd from January 1–15, 2017.

Will Russia’s Oil Production Impact Crude Oil Prices in 2017?

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Russia’s crude oil production estimates in 2017

Russia’s crude oil production averaged ~10.97 MMbpd in 2016—the highest level in the last 30 years. Market surveys estimate that Russia’s crude oil production will rise by 170,000 bpd to average 11.14 MMbpd in 2017. The EIA estimates that Russia’s crude oil and other liquid production will average 11.36 MMbpd and 11.41 MMbpd in 2017 and 2018, respectively.

Russia and major oil producers deal

OPEC (Organization of the Petroleum Exporting Countries) and Russia were major players in the production cut deal that’s been supporting crude oil prices. At a meeting on December 10, 2016, Russia said that it would reduce its production by 300,000 bpd from 11.21 MMbpd in November 2016.

High crude oil prices have a positive impact on crude oil and gas producers’ earnings like Carrizo Oil & Gas (CRZO), PDC Energy (PDCE), and Sanchez Energy (SN).

Impact on crude oil prices, stocks, and ETFs 

Russia showed its commitment to the deal by cutting its production in the first half of January 2017. Falling production would support crude oil prices in 1H17.

A Reuters poll estimates that Russia’s crude oil production will hit new highs in 2H17 after major oil producers’ production cut deal expires in June 2017. It could pressure oil prices in 2H17.

In the next part of this series, we’ll discuss how long major oil producers’ output cut plan could impact crude oil prices.

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