uploads///Non Opec production decline

Declining Non-OPEC Production Estimates Help the Oil Market


Apr. 21 2015, Published 11:47 a.m. ET

Non-OPEC crude oil production growth will decline in 2015

In its STEO (Short-Term Energy Outlook) April edition, the EIA (U.S. Energy Information Administration) reported that production growth estimates from non-OPEC (Organization of the Petroleum Exporting Countries) countries will decline in 2015—compared to 2014. The estimates show that production growth will also decline in 2016—compared to 2015. Non-OPEC countries aren’t part of OPEC.

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US production growth declines in 2015

The EIA reported that US crude oil production growth increased by 1.637 MMbpd (million barrels per day) in 2014. In contrast, it would rise by 0.778 MMbpd in 2015. Estimated US production growth will increase by 0.394 MMbpd in 2016. These figures show a decline in US crude oil production growth YoY (year-over-year).

Similary, Russia’s production growth increased by 0.089 MMbpd in 2014. It would decline to 0.057 MMbpd in 2015 and 0.138 MMbpd in 2016.

However, estimated annual crude oil production from the US will be at 14.78 MMbpd in 2015 and 15.17 MMbpd in 2016. Russia will produce 10.80 MMbpd in 2015 and 10.66 MMbpd in 2016. Brazil, China, and Canada will have a marginal increase in crude oil production in 2015—compared to 2014. Slowing production growth and slowing production might support oil prices.

In the meantime, higher oil prices are positive for oil ETFs like the United States Oil Fund LP (USO). In contrast, higher oil prices negatively impact oil refining companies’ profit margins—like Marathon Petroleum (MPC), Holly Frontier (HFC), and Western Refining (WNR). They account for 3.82% of the SPDR Oil and Gas ETF (XOP).


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