X
<

Will President Trump Crash Crude Oil Prices?

PART:
1 2 3 4 5 6 7
Part 6
Will President Trump Crash Crude Oil Prices? PART 6 OF 7

Could Major Oil Producers’ Production Cut Extend to 2H17?

Crude oil prices and major oil producers’ output cut plans 

Crude oil (USO) (UCO) (USL) (IXC) (ERY) prices rose ~18% between November 15, 2016, and December 28, 2016, due to the expectation that major oil producers’ production cuts would curb oversupply in the market.

Could Major Oil Producers&#8217; Production Cut Extend to 2H17?

Interested in XLE? Don't miss the next report.

Receive e-mail alerts for new research on XLE

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

However, crude oil prices have fallen ~4% in February despite the fall in crude oil production from OPEC and Russia in January. For more crude oil prices and its drivers, read Part 1 of this series. A rise in production from Iran in January 2017 also pressured oil prices.

On February 7, 2017, Iran’s oil minister said that major oil producers should extend the oil production cut deal in 2H17. The production cut would curb oversupply in the oil market and support crude oil (BNO) (XLE) (ERY) (ERX) prices. Higher crude oil prices have a positive impact on oil and gas producers’ earnings like Marathon Oil (MRO), Warren Resources (WRES), Hess (HES), and PDC Energy (PDCE).

Saudi Arabia and major oil producers output cut plans 

In January 2017, Saudi Arabia’s energy minister said that OPEC might not extend the production cut deal beyond six months. He thinks that the oil market’s rebalancing will end by 1H17.

If there’s a delay in the rebalancing, we might see production cuts continue for another six months. Changes in supply and demand impact crude oil (FENY) (XES) (USO) (RYE) prices.

In the next part of the series, we’ll analyze whether or not major oil producers’ production cut plan will fail.

X

Please select a profession that best describes you: