Crude oil price catalyst
So far in this series, we’ve looked at bullish catalysts for crude oil prices. Now let’s look at some key bearish drivers for crude oil prices in 2016.
Bearish drivers for crude oil prices
- The expectation of rising crude oil production from Saudi Arabia could see crude oil prices under pressure. For more on this, read Why Is Saudi Arabia the King of the Crude Oil Market?
- Iran will most likely increase crude oil production until it reaches pre-sanction levels. To learn more, read Iran’s Crude Oil Production: Biggest Bearish Catalyst for Crude Oil.
- The American Petroleum Institute estimated that Cushing crude oil stocks rose by 1.9 MMbbls (million barrels) for the week ended April 22, 2016, compared to the previous week. To learn more about Cushing crude oil stocks, read Cushing Crude Oil Stocks Could Put Pressure on Crude Oil Prices.
- The complete failure of the Doha oil producers meeting will also put pressure on crude oil prices. To learn more, read Hopes for Oil Producer Meeting Boosted Prices for Last 2 Months and Why Did the Doha Oil Producer Meeting Fail?
- Crude oil production from Russia, Saudi Arabia, and Iraq are near record levels. To learn more, read How Is OPEC Crude Production Trending ahead of Doha Meeting? It could add pressure to oil prices.
- The IEA (International Energy Agency) and OPEC’s (Organization of the Petroleum Exporting Countries) monthly oil market report states that global crude oil stocks are more than 3 billion barrels. To learn more, read How Global Crude Oil Inventory Will Limit the Upside for Crude Oil. US crude oil inventories are 100 million barrels more than the five-year average. For more on the US crude oil inventory, read the next part of the series.
Impact on crude oil producers and ETFs
Multiyear low crude oil prices impact the revenues of domestic and international oil producers such as China Petroleum & Chemical (SNP), National Iranian Oil Company, PetroChina (PTR), Northern Oil & Gas (NOG), and Denbury Resources (DNR). They also affect ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the PowerShares DWA Energy Momentum ETF (PXI), and the United States Brent Oil ETF (BNO).
In the next two parts of this series, we’ll take a look at the American Petroleum Institute’s crude oil, gasoline, and distillate stocks estimates.