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Crude Oil Price Forecasts: Downgraded for the Fifth Month

PART:
1 2 3 4 5 6
Part 4
Crude Oil Price Forecasts: Downgraded for the Fifth Month PART 4 OF 6

Bulls and Bears Should Watch Saudi Arabia’s Crude Oil Production

Saudi Arabia’s crude oil production  

Saudi Arabia is OPEC’s largest crude oil producer. A Reuters survey estimates that Saudi Arabia’s crude oil production rose by 20,000 bpd (barrels per day) to 10 MMbpd (million barrels per day) in September 2017—compared to August 2017. Production rose for the first time in three months despite major oil producers’ output cut deal.

A rise in Saudi Arabia’s crude oil production is bearish for crude oil (BNO) (UCO) prices. Lower crude oil prices have a negative impact on oil and gas producers (IXC) (XLE) like Rosneft, Continental Resources (CLR), and Comstock Resources (CRK).

Bulls and Bears Should Watch Saudi Arabia’s Crude Oil Production

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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 output cut deal. Saudi Arabia has been curbing exports for the past few months to drain global and US crude oil inventories. It’s meant to push crude oil (BNO) (USL) prices higher.

Saudi Arabia is expected to keep crude oil prices unchanged for its Asian customers for November loadings—compared to October. Saudi Arabia is selling crude oil at lower rates despite strong Brent crude oil prices. It suggests that Saudi Arabia wants to maintain its market share in the Asian region.

Plans to extend the production cut deal 

Major oil producers’ meeting was held on September 22, 2017. In this meeting, oil producers decided to wait until January 2018 to determine whether to extend the production cut deal beyond March 2018. Saudi Arabia has been supporting the production cut deal extension beyond March 2018. OPEC’s next meeting will be on November 30, 2017. 

Impact

Any fall in Saudi Arabia’s crude oil production and exports could benefit crude oil (BNO) (DBO) 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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