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Production Cuts and OPEC's Reports Could Drive Crude Oil Prices

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Production Cuts and OPEC's Reports Could Drive Crude Oil Prices PART 1 OF 6

Will US Shale Oil Production Rise for the 12th Straight Month?

Brent and US crude oil prices  

December WTI (West Texas Intermediate) crude oil futures (UCO) (DBO) contracts rose 0.04% to $56.76 per barrel on November 13, 2017. Brent oil futures (BNO) contracts rose 0.6% to $63.16 per barrel on the same day. Oil prices are near a 30-month high.

OPEC reported that its production fell 0.5% to 32.59 MMbpd (million barrels per day) in October 2017—compared to the previous month. OPEC released the report yesterday, which supported oil prices. However, the strong dollar (UUP) limited the upside for oil prices on the same day.

Will US Shale Oil Production Rise for the 12th Straight Month?

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US shale oil production

The EIA (U.S. Energy Information Administration) released its monthly drilling report on November 13, 2017. It reported that US shale oil production will rise by 80,000 bpd (barrels per day) to 6.17 MMbpd in December 2017—compared to November 2017. It would be the 12th straight rise in US shale oil production. The expectation of a rise in US crude oil production limited the upside for crude oil (USO) (BNO) (OIL) prices on November 13, 2017.

Meanwhile, Saudi Arabia’s crude oil production rose to ~10 MMbpd in October 2017, which also capped oil prices. Changes in oil prices impact oil producers (XLE) (VDE) like Anadarko Petroleum (APC), Noble Energy (NBL), Chevron (CVX), and Marathon Oil (MRO).

Wall Street  

The NASDAQ (QQQ) rose 0.1% to 6,757.6 on November 13, 2017. The Dow Jones Industrial Average Index (DIA) rose 0.07% to 23,439.70 on the same day. The S&P 500 (SPY) rose 0.1% to 2,584.84 on November 13, 2017. The utilities (XLU) (VPU), consumer staples (XLP) (VDC), and materials (XLB) sectors supported SPY on November 13, 2017. These three indices hit a new record on November 8, 2017.

Series overview  

In this series, we’ll focus on production cuts, OPEC’s monthly report, the US dollar, Cushing inventories, and the US rig count.

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