Crude oil price drivers
In the previous two parts of this series, we covered bullish catalysts for crude oil prices. Now, let’s look at some vital bearish catalysts for crude oil prices in 2016.
Bearish drivers for crude oil prices
- On May 13, 2016, OPEC (Organization of the Petroleum Exporting Countries) released its monthly oil market report. The report highlighted that OPEC’s crude oil production rose by 188,000 bpd (barrels per day) to 32.4 MMbpd (million barrels per day) in April 2016—compared to March 2016. The rise in crude oil production from OPEC will have a negative impact on crude oil prices. To learn more, read OPEC Crude Oil Production Data Ignites Concerns of Oversupply.
- OPEC’s monthly report showed that Saudi Arabia’s crude oil production rose by 37,600 bpd to 10.3 MMbpd in April 2016—compared to March 2016. It’s 5% more than the 2014 annual average. Industry surveys estimate that the crude oil production from Saudi Arabia could rise to 10.5 MMbpd in the short term. To learn more, read Why Saudi Arabia May Increase Crude Oil Production even Further.
- OPEC’s monthly report showed that Iraq’s crude oil production rose by 154,000 bpd to 4.4 MMbpd in April 2016—compared to March 2016. Iraq exported 3.36 MMbpd of crude oil for the same period, according to data from Iraq’s Oil Ministry. This level is close to record exports of 3.37 MMbpd in November 2015. For more on Iraq’s crude oil production and exports, read Iraq’s High Crude Oil Exports Could Impact the Crude Oil Market.
- Iran exported ~2 MMbpd of crude oil in April 2016. OPEC’s monthly report showed that Iran’s crude oil production rose by 198,000 bpd to 3.5 MMbpd in April 2016—compared to March 2016. It almost doubled its exports since early 2016. Read What’s Next for the Crude Oil Mark in Iran? to learn more.
- The API (American Petroleum Institute) estimated that Cushing crude oil inventories rose by 0.51 MMbbls (million barrels) for the week ending May 13, 2016. Read Cushing Crude Oil inventories Hit Record Levels: What’s Next? to learn more about Cushing crude oil inventories.
- The failure of the Doha oil producers’ meeting will also pressure crude oil prices. Read Hopes for Oil Producer Meeting Boosted Prices for Last 2 Months and Why Did the Doha Oil Producer Meeting Fail? to learn more.
- Market surveys project that global crude oil inventories would 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 11.4% more than the same period in 2015. For more on US crude oil inventories, read the next part of this series.
Impact on crude oil producers and ETFs
These bearish drivers could limit the upside for crude oil prices. Multiyear low crude oil prices impact domestic and international oil producers’ margins like PetroChina (PTR), Comstock Resources (CRK), Whiting Petroleum (WLL), and Denbury Resources (DNR). The roller coaster ride in crude oil prices also impacts ETFs and ETNs such the iShares U.S. Oil Equipment & Services ETF (IEZ) 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 crude oil, gasoline, and distillate estimates.