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IEA’s Monthly Oil Market Report Is Bearish for Crude Oil Prices

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IEA’s monthly oil market report 

The IEA (International Energy Agency) released its monthly oil market report on October 11, 2016. The IEA reduced global crude oil demand growth projections for 2016 to 1.2 MMbpd compared to 1.4 MMbpd in August 2016. It expects crude oil demand from China to slow down. The IEA added that crude oil supplies rose 600,000 bpd in September 2016 compared to the previous month due to the rise in production from Russia.

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IEA’s OPEC production estimates 

The IEA reported that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production rose by 160,000 bpd (barrels per day) to 33.6 MMbpd in September 2016 compared to the previous month. Current OPEC production is at its highest level, according to IEA records. For more on OPEC production, read the next part of the series.

In its Algeria meeting, OPEC reached an agreement to curb crude oil production by up to 700,000 bpd. OPEC members will discuss the details of this agreement at its meeting in November. For more on these meetings, read part one of this series.

The IEA also added that supply will outstrip demand until 1H17. Slowing demand and record OPEC and Russian crude oil production could be negative for crude oil prices. Lower crude oil prices could have a negative impact on the earnings of oil and gas producers like Cobalt International Energy (CIE), Warren Resources (WRES), and QEP Resources (QEP).

Volatility in crude oil prices impacts ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the iShares U.S. Oil Equipment & Services ETF (IEZ), the DB Crude Oil Double Short ETN (DTO), the PowerShares DWA Energy Momentum (PXI), and the United States 12 Month Oil ETF (USL).

In the next two parts of this series, we’ll look at some key bearish drivers for crude oil prices.

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