Global crude oil supply outages
The EIA (U.S. Energy Information Administration) estimates that global crude oil supply outages fell by 38,000 bpd (barrels per day) to 2,284,000 bpd in November 2016—compared to the previous month. Global crude oil supply outages fell 1.6% month-over-month and 25.6% year-over-year. The rise in global crude oil supplies due to the decline in outages could have a negative impact on (BNO) (PXI) (XOP) (USL) (ERX) crude oil prices. For more on crude oil prices, read Part 1 of this series. 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 88,000 bpd to 1.9 MMbpd in November 2016—compared to the previous month. Libya and Nigeria had the largest production outages among OPEC members in November 2016.
- Non-OPEC crude oil producers’ supply outages rose by 50,000 bpd to 0.37 MMbpd in November 2016—compared to September 2016.
- The EIA said that Canada didn’t have any crude oil supply outages between August 2016 and November 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 Nigeria’s crude oil production rose by 30,000 bpd to 1.6 MMbpd in November 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.
- The EIA estimated that Venezuela’s crude oil production fell by 10,000 bpd to 2.1 MMbpd in November 2016—compared to the previous month. Production fell due to oil equipment shortages and the economic crisis in the country.
Impact of falling global crude oil supply outages
The expectation of a rise in global crude oil supplies due to the decline in outages in Libya 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), ExxonMobil (XOM), Chevron (CVX), Swift Energy (SFY), Denbury Resources (DNR), and Cobalt International Energy (CIE).
The ups and downs in crude oil and natural gas prices also impact ETFs such as the Energy Select Sector SPDR ETF (XLE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), 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.