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Slower Non-OPEC Production and Other Bullish Forces for Crude Oil

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Apr. 27 2016, Published 8:49 a.m. ET

Bullish drivers for crude oil prices 

In this part of the series, we’ll look at some more bullish catalysts for crude oil prices over the long term.

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Bullish catalysts for crude oil prices 

  • The IEA (International Energy Agency) estimates that crude oil production from non-OPEC (Organization of the Petroleum Exporting Countries) producers could see the biggest decline in 25 years. For more on this, read Non-OPEC Crude Oil Production Impacts Crude Oil Prices and Will the Crude Oil Supply and Demand Gap Narrow by Early 2017?
  • December 2020 WTI (West Texas Intermediate) crude oil futures contracts were trading at $49.52 per barrel on April 20, 2016. They rose to $52.58 per barrel on April 27, 2016. The forward curve suggests higher crude oil prices in the future.
  • Chinese crude oil imports hit a record in March 2016 due to the rise in demand from teapot refineries. Crude oil imports from China are expected to rise in 2016. To learn more, read China Crude Imports Hit Record: How Will It Affect Global Market?.
  • The IEA expects India to surpass Japan as the third-largest crude oil consumer in 2016. India’s crude oil consumption will increase to 4.2 MMbpd (million barrels per day) in 2016 compared to 4.1 MMbpd for Japan in 2016. The IEA also projects that India’s crude oil demand growth rate will be the highest by 2040. To learn more, read India’s Crude Oil Demand Will Likely Drive the Crude Oil Market. 

Impact on energy stocks and ETFs

The rise in crude oil prices benefits oil and gas exploration and production companies such as Ultra Petroleum (UPL), PDC Energy (PDCE), Triangle Petroleum (TPLM), and SM Energy (SM). ETFs and ETNs such as the iShares US Oil Equipment & Services ETF (IEZ), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE) are also influenced by the ups and down of crude oil prices.

In the next part of this series, we’ll look at some key bearish catalysts for oil prices.

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