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What’s the Consensus for Crude Oil Demand and Production?


Apr. 8 2015, Updated 9:06 a.m. ET

Oil demand

Saudi Arabia increased the crude oil prices for its biggest market—Asia. This signals improved demand outlook from the Asian region. The rise in oil prices will also be supported by the refineries starting back after the repair and maintenance period. This suggests a short-term demand increase. OPEC (Organization of the Petroleum Exporting Countries) countries also expect global demand to increase due to lower oil prices.

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Crude oil production

Market consensus suggests that US crude oil production will hit the highs in April 2015. The average production is estimated to be around 380,000 bpd (barrels per day). The dropping rig counts and massive production from the existing rigs would supply the world market with excess oil in the second half of 2015 and 2016.

We shouldn’t forget that the lifting sanctions from Iran will add oil supplies to this surplus market. EIA (U.S. Energy Information Administration) sources stated that the world has more than 1.5 MMbbls (million barrels) of crude oil per day. Yesterday, the dollar index closed 0.54% higher. Crude oil is a dollar-denominated commodity. The rise in the dollar makes crude oil expensive. The rising dollar and supply glut could push oil prices to the nearest support of $46 per barrel.

The oil price increase saw oil ETFs, like the ProShares Ultra DJ-UBS Crude Oil (UCO), skyrocket in yesterday’s trade. It increased by 9.66% on April 6, 2015. The largest oil ETFs, like the United States Oil Fund LP (USO), also increased by 4.95% at the close of trade. Stocks like Penn Virginia (PVA), Laredo Petroleum (LPI), and EP Energy (EPE) rocked the SPDR Oil and Gas ETF (XOP). They gained over 4% in yesterday’s trade. They account for 4.60% of XOP. Their crude oil production mix is greater than 50%.


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