Saudi Arabian summer
OPEC (Organization of the Petroleum Exporting Counties) kingpin Saudi Arabia saw its crude oil production rise by 30,000 bpd (barrels per day) to 10.5 MMbpd (million barrels per day) in July 2016 compared to June. For more information, read Decoding OPEC Members’ Crude Production in July 2016.
This rise in production will be used during the summer season between May and September 2016. In Saudi Arabia, crude oil is being used to generate electricity for air-conditioning purposes due to a hotter-than-normal summer. This power generation will consume around 1 MMbpd of crude oil during the summer.
Crude oil inventories in Saudi Arabia fell by 38.6 MMbbls to 290.9 MMbbls in June 2016 compared to October 2015, nearing a two-year low.
US winter heating season
The US winter heating season will also drive demand for crude oil and refined products. US winter demand and Saudi summer demand should narrow crude oil’s supply and demand gap. For more on this, read Part Two of the series.
Slowing non-OPEC supply could also help to narrow the gap between supply and demand.
Rising crude oil demand from Asian economies should also support crude oil prices. For more information, read India’s Crude Oil Demand: Tussle between the Bulls and Bears and Analyzing China’s Crude Oil Imports and Fuel Exports.
Read Is Renewed Price Correction Possible for Crude Oil Prices? for more on crude oil price forecasts.
For ongoing industry analysis, check out Market Realist’s Upstream Oil and Gas page.