Crude oil price drivers
In the previous two parts of this series, we covered bullish drivers 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
- Iraq exported 3.36 MMbpd of crude oil in April compared to 3.29 MMbpd in March 2016 as per data from Iraq’s oil ministry. This level is close to the record exports of 3.37 MMbpd in November 2015. For more on Iraq’s crude oil production and exports, check out Iraq’s High Crude Oil Exports Could Impact the Crude Oil Market.
- Market surveys project that crude oil production from Saudi Arabia could rise to 10.5 MMbpd in the short term. For more, read Why Saudi Arabia May Increase Crude Oil Production even Further.
- Iran exported ~2 MMbpd of crude oil in April 2016. It almost doubled its exports since early 2016. To learn more, read What’s Next for the Crude Oil Mark in Iran?
- The American Petroleum Institute estimated that Cushing crude oil stocks rose by 0.382 MMbbls (million barrels) between April 22 and April 29, 2016. To learn more about Cushing crude oil stocks, read Cushing Crude Oil Stocks: Largest Build since December 2015.
- The failure of the Doha oil producers’ meeting will also pressure 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?
- The IEA (International Energy Agency) and OPEC’s (Organization of the Petroleum Exporting Countries) report states that global crude oil inventories exceed 3 billion barrels. To learn more, read How Global Crude Oil Inventory Will Limit the Upside for Crude Oil. US crude oil inventories are 10% more than they were at this time in 2015. For more on the US crude oil inventories, see the next part of this series.
- The slowing global economy could affect demand and crude oil prices.
Impact on crude oil producers and ETFs
These drivers could hurt crude oil prices. Lower crude oil prices affect the margins of national and international oil producers like China Petroleum & Chemical (SNP), PetroChina (PTR), Comstock Resources (CRK), Whiting Petroleum (WLL), and Denbury Resources (DNR). The roller coaster ride in crude oil prices also affects ETFs and ETNs such 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 API’s (American Petroleum Institute) crude oil, gasoline, and distillate estimates.