Oil producer meeting
Qatar has invited all the OPEC (Organization of Petroleum Exporting Countries) members and other major oil producers to a meeting on April 17, 2016. The meeting will follow an initial meeting held on February 16, 2016, where Russia, Saudi Arabia, Venezuela, and Qatar decided to freeze crude oil production at January 2016 levels.
The April meeting was originally scheduled for March 2016. However, due to scheduling difficulties, it had to be postponed. The delay increased volatility in the crude oil market. The intent of the meeting is to freeze crude oil production at January 2016 levels. So far, 15 OPEC and non-OPEC producers, which together account for ~73% of global crude oil production, plan to support this initiative.
Crude oil production from major oil producers rose in March 2016 ahead of the oil producer meeting. To learn more, read How Is OPEC Crude Production Trending ahead of the Doha Meeting? Likewise, Iran’s crude oil production also rose in March 2016. To learn more, read How Iran’s Production Was a Turning Point for Crude Prices in 2016. Plus, Russia’s crude oil production hit a 30-year high.
Venezuela reported that the first priority of the meeting is to freeze crude oil production at January 2016 levels. Oil prices have rallied more than 50% due to the upcoming meeting and other factors that we discussed in the second part of the series.
High oil prices benefit Middle Eastern oil producers like Saudi Aramco, National Iranian Oil Company, Qatar Petroleum, and Oman Oil Company. They also impact US oil producers like Carrizo Oil & Gas (CRZO), PDC Energy (PDCE), Cobalt International Energy (CIE), Warren Resources (WRES), and Bonanza Creek Energy (BCEI).
The volatility in oil prices impacts oil and gas ETFs and ETNs like the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x ETF (ERY), the Fidelity MSCI Energy (FENY), the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the Vanguard Energy ETF (VDE), and the iShares U.S. Energy (IYE).