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How Does Non-OPEC Crude Oil Production Impact Crude Oil Prices?

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Nov. 20 2020, Updated 1:37 p.m. ET

Non-OPEC crude oil and other liquids production 

The EIA (U.S. Energy Information Administration) estimates that non-OPEC (Organization of the Petroleum Exporting Countries) crude oil and other liquids production rose ~1.1 MMbpd (million barrels per day) to 57.5 MMbpd in October 2016 compared to the previous month. Non-OPEC crude oil and other liquids production rose 1.9% month-over-month but fell 0.70% year-over-year.

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Non-OPEC crude oil production  

The latest figures from the EIA suggest that non-OPEC crude oil production fell 386,600 bpd (barrels per day) to 44.1 MMbpd (million barrels per day) in August 2016 compared to the previous month. Non-OPEC crude oil production fell 0.90% month-over-month and 3.6% year-over-year.

Canada, the United States, Russia, Brazil, and China are the major non-OPEC crude oil producers. Crude oil production from Canada and the United States rose in 2014 and 2015. Production increased due to technological advancement, cheaper credit facilities, and higher crude oil prices between 2010 and 2014.

The rise in non-OPEC production over the last few years contributed to the rise in global supplies. With demand being unable to keep up with supply, crude oil prices took a dive. To learn more, read Will OECD Crude Oil Inventories Impact Crude Oil Prices? As supply exceeds demand, inventories rise. Look at our latest analysis of US crude oil inventories in Part 2 of this series.

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Non-OPEC crude oil production in 2017 

The EIA estimates that non-OPEC crude oil and other liquids production could rise 320,000 bpd in 2017 compared to 2016. The major rise in production in this period would be driven by the United States. To learn more about US crude oil production, read Is US Crude Oil Production at a Turning Point?

The International Energy Agency has forecast that non-OPEC supplies will rise 500,000 bpd in 2017 compared to 2016.

Impact of non-OPEC crude oil production on oil prices, stocks, and ETFs  

The expectation of rising non-OPEC production in 2017 will pressure crude oil prices. Lower crude oil prices impact national and international oil producers such as Stone Energy (SGY), W&T Offshore (WTI), Denbury Resources (DNR), Exxon Mobil (XOM), Devon Energy (DVN), and Laredo Petroleum (LPI).

Moves in crude oil prices also influence ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the iShares US Oil Equipment & Services (IEZ), the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the Direxion Daily Energy Bear 3X ETF (ERY), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the SPDR S&P Oil & Gas Equipment & Services ETF (XES).

In the last part of this series, we’ll take a look at some crude oil price forecasts.

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