OPEC crude oil production
The latest survey from Reuters suggested that OPEC‘s (Organization of the Petroleum Exporting Countries) crude oil production is breaking historical records. OPEC crude oil production hit 33.1 MMbpd (million barrels per day) in January 2016. OPEC’s crude oil production figures include production in Indonesia.
The 12-member OPEC production was at 31.9 MMbpd in January 2016. It’s the highest in Reuter’s survey records since the beginning of 1997. The rise in production was driven by rising production from Iran, which we’ll cover in the next part of the series. Iraq and Nigeria also scaled up production in January 2016.
On December 4, 2015, OPEC abandoned the collective production policy of 30 MMbpd for the group members. Instead, they suggested that OPEC members could produce at record levels. Oil prices have fallen 70% in the last 19 months due to record production from the United States and OPEC.
OPEC members are producing more crude oil to offset lower oil prices and defend its market share against US shale oil producers such as Whiting Petroleum (WLL), Range Resources (RRC), Hess (HES), ConocoPhillips (COP), Anadarko Petroleum (APC), and Noble Energy (NBL).
The record crude oil production from OPEC will continue to put pressure on the oil market. We could see extended crude oil bear market if OPEC continues to produce at these levels. To know more about Saudi production, you can read Saudi Arabia’s Crude Oil Production: Key for the Global Oil Market. For Russian crude oil production, you can read Russia’s Production Will Put More Pressure on the Crude Oil Market.
ETFs such as the United States Oil Fund (USO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the First Trust Energy AlphaDEX ETF (FXN), and the Vanguard Energy ETF (VDE) are also affected by the ups and down in the oil market.