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Hurricane Irma, Russia, and Saudi Arabia Impact Crude Oil

PART:
1 2 3 4 5 6
Part 4
Hurricane Irma, Russia, and Saudi Arabia Impact Crude Oil PART 4 OF 6

Will Saudi Arabia Extend the Output Cut Deal?

Saudi Arabia’s crude oil production  

Saudi Arabia is OPEC’s largest crude oil producer and exporter. A Reuters survey estimates that Saudi Arabia’s crude oil production fell by 40,000 bpd (barrels per day) to 9.98 MMbpd (million barrels per day) in August 2017—compared to the previous month. Production fell for the second consecutive month due to the production cut deal.

A fall in production from Saudi Arabia is bullish for crude oil (FENY) (IXC) (IYE) prices. Higher crude oil prices have a positive impact on oil and gas producers like Apache (APA), W&T Offshore (WTI), Contango Oil & Gas (MCF), and Denbury Resources (DNR).

Will Saudi Arabia Extend the Output Cut Deal?

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EIA’s estimates

The EIA (U.S. Energy Information Administration) estimates that Saudi Arabia’s crude oil production rose by 50,000 bpd to 10.2 MMbpd in July 2017—compared to the previous month. Production rose 0.5% month-over-month but fell 2.8% year-over-year.

OPEC’s crude oil production and exports 

A Reuters survey estimates that OPEC’s crude oil production fell by 170,000 bpd to 32.83 MMbpd in August 2017—compared to July 2017.

OPEC’s crude oil exports fell by 920,000 bpd to 25.19 MMbpd in August 2017—compared to the previous month.

Saudi Arabia’s export plans 

Saudi Arabia is expected to cut crude oil exports to worldwide customers by 350,000 bpd in October 2017 due to the production cut deal. It’s expected to cut crude oil exports to worldwide customers by 520,000 bpd in September 2017. Saudi Arabia has been curbing exports for the past few months to drain global and US crude oil inventories to support crude oil (UWT) (DWT) prices.

Plans to extend the production cut deal 

On September 10, Saudi Arabia’s energy minister discussed a possible extension of the production cut deal beyond March 2018 with Venezuela and Kazakhstan.

Major oil producers agreed to cut crude oil production by 1.8 MMbpd from January 2017 to March 2018. OPEC’s next meeting is on November 30, 2017. 

A fall in OPEC and Saudi Arabia’s crude oil production and exports would support crude oil (ERY) (ERX) prices.

In the next part of this series, we’ll see how Russia’s crude oil production could impact crude oil prices.

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