OPEC’s Crude Oil Production Fell Again
OPEC’s crude oil production fell in February 2017
A Bloomberg survey estimates that OPEC (Organization of the Petroleum Exporting Countries) showed 104% compliance with targeted production cuts in February 2017 due to major producers’ production cut deal. The deal led to a fall in OPEC’s crude oil production by 65,000 bpd (barrels per day) to 32.17 MMbpd (million barrels per day) in February 2017—compared to January 2017. It supported crude oil (RYE) (IYE) (IXC) prices. Crude oil prices have risen almost 20% since November 2016 due to major producers’ production cut deal.
A Reuters survey estimated that OPEC showed 82% and 94% compliance with targeted production cuts in January 2017 and February 2017. The rise in compliance among OPEC members is bullish for crude oil prices. Higher crude oil prices have a positive impact on oil and gas producers’ earnings like Occidental Petroleum (OXY), Hess (HES), PDC Energy (PDCE), and Cobalt International Energy (CIE).
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Major oil producers’ plan in the coming months
Angola and Iraq reached 78% and 58% of their targeted production cuts, according to Bloomberg surveys in February 2017. Countries like the United Arab Emirates, Angola, and Iraq are expected to reduce production more in the coming months due to major producers’ production cut deal. For more, read Part 1 of this series.
Saudi Arabia’s larger-than-expected production cuts in January 2017 and February 2017 already supported oil prices. The expectation of higher compliance among OPEC and the possible extension of major producers’ production cut deal could support oil prices in 2017. However, oil prices have been trading in a narrow range for the last few months. US crude oil prices are seeing key resistance levels around $54 per barrel despite OPEC’s massive production cuts. Will Russia be the trump card?
Next, we’ll analyze Russia’s crude oil production.