Global crude oil supply outages
The EIA (U.S. Energy Information Administration) estimates that global crude oil supply outages fell by 408,000 bpd (barrels per day) to 2,332,000 bpd in October 2016 compared to the previous month. Global crude oil supply outages fell 15.6% month-over-month and 27% year-over-year. Global crude oil supply outages were at 3.6 MMbpd (million barrels per day) in May 2016—the highest since 2011.
- OPEC oil producers’ supply outages fell by 306,000 bpd to 2 MMbpd in October 2016—compared to the previous month. Libya and Nigeria had the largest production outages among OPEC members in October 2016.
- Non-OPEC crude oil producers’ supply outages fell by 102,000 bpd to 0.3 MMbpd in October 2016—compared to September 2016.
- The EIA said that Canada didn’t have any crude oil supply outages between August 2016 and October 2016. Canada’s crude oil supply outages stood at 50,000 bpd, 400,000 bpd, and 750,000 bpd in July, June, and May, respectively, due to wildfire-related shutdowns.
- The EIA estimated that Venezuela’s crude oil production fell by 10,000 bpd to 2.1 MMbpd in October 2016—compared to the previous month. Production fell due to electricity disruptions, oil equipment shortages, and the economic crisis in the country.
- The EIA estimated that Nigeria’s crude oil production rose by 8,000 bpd to 1.6 MMbpd in October 2016—compared to the previous month. Rebel attacks on oil pipelines and infrastructure impacted Nigeria’s crude oil production. Nigeria’s crude oil production fell to 1.4 MMbpd in May 2016—the lowest level in the past 22 years.
Impact of falling global crude oil supply outages
The rise in global crude oil supplies due to the decline in outages could have a negative impact on crude oil prices. Lower crude oil prices could have a negative impact on oil and gas producers’ earnings such as Contango Oil & Gas (MCF), Chevron (CVX), Denbury Resources (DNR), and Cobalt International Energy (CIE).
Volatility in oil and gas prices also impacts ETFs such as the Energy Select Sector SPDR ETF (XLE), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the Direxion Daily Energy Bear 3x (ERY), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
Next, we’ll analyze OPEC’s monthly crude oil production and its impact on the crude oil market.