Saudi Arabia’s crude oil production
A Reuters survey estimated that Saudi Arabia’s crude oil production fell by 150,000 bpd (barrels per day) to 10,550,000 bpd in September 2016—compared to August 2016.
Saudi Arabia’s crude oil production hit an all-time high in August 2016. The summer cooling season drives the demand for domestic crude oil. To learn more, read Saudi Arabia: Weather Will Be a Key Demand Driver of Oil in 2H16. As a result, production rose due to higher export requirements and demand.
Saudi Arabia and oil producers’ meeting
Saudi Arabia is the largest crude oil producer and exporter among OPEC (Organization of the Petroleum Exporting Countries) members. Saudi Arabia depends on crude oil export revenue to meet its budget expenses. Saudi Arabia already used 150 billion of foreign exchange reserves. So, it needs high crude oil prices, which would narrow its budget deficits.
Any production cuts by Saudi Arabia and OPEC could be offset by a rise in production from Iran, Nigeria, and Libya. Saudi Arabia’s role as a swing producer will also have a limited impact on crude oil prices due to the rise in crude oil production from non-OPEC producers like Russia, the US, Brazil, and Mexico in the last few years. As a result, the oversupplied market could last longer. It will keep a lid on prices. Lower crude oil prices will have a negative impact on oil producers such as Warren Resources (WRES), W&T Offshore (WTI), and SM Energy (SM).
The rollercoaster ride in crude oil prices also impacts ETFs and ETNs such as the VelocityShares 3x Long Crude Oil ETN (UWTI), the United States 12 Month Oil ETF (USL), the Fidelity MSCI Energy ETF (FENY), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
In the next part of this series, we’ll look at how Iran’s crude oil production could weigh on crude oil prices.
The EIA reported that monthly US crude oil production fell by 20,000 bpd to 8,685,000 bpd in July 2016—compared to the previous month.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.