OPEC’s Monthly Oil Market Report 

OPEC (Organization of Petroleum Exporting Counties) released its Monthly Oil Market Report on October 12, 2016. OPEC’s Monthly Oil Market Report stated that OPEC’s crude oil production rose by 220,000 bpd (barrels per day) to 33.39 MMbpd (million barrels per day) in September 2016—compared to the previous month. It’s the highest in the last eight years. The data pressured crude oil prices on October 12, 2016. For more on crude oil prices, read Part 1 of this series.

For more bearish drivers, read IEA’s Monthly Oil Market Report Is Bearish for Crude Oil Prices and OPEC’s Rising Production Is Biggest Bearish Driver for Oil Prices.

OPEC’s Monthly Oil Market Report Is Negative for Oil Prices

OPEC’s Monthly Oil Market Report and oil producers’ meeting 

OPEC’s Monthly Oil Market Report also stated that non-OPEC crude oil production will increase in 2017. The rise in crude oil production could offset production cuts by OPEC producers discussed during the meetings in Algeria and Istanbul. For more on oil producers’ meetings, read Crude Oil Prices and Oil Producers’ Meeting in Istanbul and Decoding the Major Oil Producers’ Meeting in Algeria.

Oil experts think that OPEC and Russia are producing at record levels. However, the countries are talking about capping or reducing production. The lack of clarity and difficulty in maintaining the quota system among producers could pressure crude oil prices.

Supply and demand

OPEC’s Monthly Oil Market Report also stated that global crude oil demand will increase by 1.15 MMbpd to 95.56 MMbpd in 2017.

We discussed OPEC’s supply earlier. Non-OPEC supply is expected to rise by 0.24 MMbpd to 56.4 MMbpd in 2017. The rise in non-OPEC’s crude oil production will have a negative impact on crude oil prices. Lower crude oil prices have a negative impact on oil and gas exploration and production companies’ earnings like Swift Energy (SFY), Synergy Resources (SYRG), and PDC Energy (PDCE).

Uncertainty in crude oil prices also impacts ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the Energy Select Sector SPDR (XLE), the ProShares Ultra Oil & Gas (DIG), and the United States Brent Oil ETF (BNO).

Next, we’ll take a look at global crude oil inventories and how they impact the crude oil market.

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