Oil producer meeting background
Oil prices have rallied almost 40% since the initial crude oil production deal on February 16, 2016, when oil producers like Russia, Saudi Arabia, Venezuela, and Qatar decided to freeze crude oil production at January 2016 levels. To learn more, read Why Crude Oil Prices Fell despite the OPEC and Non-OPEC Deal. This meeting was followed by a meeting of major oil producers on April 17, 2016. For this meeting, Qatar invited all the OPEC (Organization of Petroleum Exporting Countries) members and other major oil producers.
The April meeting was originally scheduled for March 2016. However, due to scheduling difficulties, it had to be postponed, which led to a rise in crude oil price volatility. The intention of the oil producer meeting was to cap crude oil output at January 2016 levels. Around 16 OPEC and non-OPEC producers are estimated to have participated in this meeting, which together account for ~73% of global crude oil production.
To learn more about crude oil production levels of major oil producers ahead of the meeting, 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.
High oil prices benefit Middle Eastern oil producers like Saudi Aramco, National Iranian Oil Company, and Oman Oil Company. They also impact US oil producers like Matador Resources (MTDR), SM Energy (SM), and Warren Resources (WRES).
The roller coaster ride 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 iShares U.S. Oil Equipment & Services ETF (IEZ), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
We’ll discuss why the oil producer meeting failed in the next part of the series.
The EIA (U.S. Energy Information Administration) reported that Cushing crude oil stocks fell by 1.8 MMbbls (million barrels) to 64.5 MMbbls for the week ending April 8, 2016.
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