OPEC’s crude oil production
Bloomberg’s data suggest that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production rose by 18,000 bpd (barrels per data) to 32.1 MMbpd (million barrels per day) in December 2015—compared to the previous month. OPEC’s current crude oil production is near peak levels.
OPEC’s crude oil production estimates
OPEC will release its MOMR (Monthly Oil Market Report) on January 18, 2015. The monthly report will showcase the key production data and estimates for 2016. The consensus of rising production will continue to put pressure on the oil market. OPEC operates as a cartel and produces 40% of the global crude oil.
Saudi Arabia produced 10.3 MMbpd crude oil in December 2015. Iraq’s production rose by 119,000 bpd to 4.4 MMbpd in December 2015—compared to the previous month. For the same period, Iran’s production fell by 100,000 bpd to 2.7 MMbpd in December 2015. Iran is very confident that it will scale up production in 2016 once the oil sanctions are lifted.
Conflict of interest
Record production from OPEC is a concern for the global glut oil market. Oil prices fell by 70% since June 2014. Lower oil prices impact US and international oil producers’ margins like ExxonMobil (XOM), PetroChina (PTR), Royal Dutch Shell (RDS.A), ConocoPhillips (COP), and Chevron (CVX). Lower oil prices are raising questions about oil producers’ sustainability. We’ll discuss this more in the next part.
The roller coaster ride in the energy market impacts oil producers. It also impacts ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares US Oil & Gas Exploration & Production ETF (IEO), and the PowerShares DWA Energy Momentum Portfolio (PXI).