OPEC’s crude oil production
OPEC (Organization of the Petroleum Exporting Countries) released its Monthly Oil Market report on November 11, 2016. It estimated that OPEC’s crude oil production rose by 236,700 bpd (barrels per day) to 33,643,000 bpd in October 2016—compared to the previous month.
OPEC’s crude oil production is at the highest level in the last eight years. Its production rose due to the rise in production from Iraq, Nigeria, and Libya.
OPEC’s crude oil production rose in October despite its historic deal in September 28, 2016. Details of action on this deal should be released at OPEC’s November 30 meeting. For more on the OPEC deal, read Crude Oil Prices and Oil Producers’ Meeting in Istanbul and Decoding the Major Oil Producers’ Meeting in Algeria.
EIA’s crude oil production estimates
The EIA (U.S. Energy Information Administration) estimates that OPEC’s crude oil production will average ~33,140,000 bpd in December 2016. According to the report, OPEC’s crude oil production averaged 33,120,000 bpd in October 2016.
OPEC’s rising crude oil production, despite its agreement to cut or cap production, could have a negative impact on crude oil prices. Lower crude oil prices could have a negative impact on oil and gas exploration and production companies’ earnings such as Swift Energy (SFY), Marathon Oil (MRO), ConocoPhillips (COP), and PDC Energy (PDCE).
Moves in crude oil prices also impact ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the Fidelity MSCI Energy ETF (FENY), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the Direxion Daily Energy Bear 3x ETF (ERY), the ProShares Ultra Bloomberg Crude Oil (UCO), and the United States Brent Oil ETF (BNO).
Impact on oil producers
OPEC didn’t cap its production at its meeting on June 2, 2016. Its next meeting is scheduled for November 30, 2016. Read Will OPEC Successfully Implement Its Production Cap Plans? and What Will Happen if the Oil Producer Meeting Succeeds? to learn more. For the latest updates, read Part 1 of this series.
Next, we’ll take a look at Iran’s crude oil production in October.