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Global Crude Oil Supply Outages Drive Crude Oil Prices

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Global crude oil supply outages

The EIA (U.S. Energy Information Administration) estimates that global crude oil supply outages fell by 72,000 bpd (barrels per day) to 2.2 MMbpd (million barrels per day) in December 2016—compared to the previous month. Global crude oil supply outages fell 3.2% month-over-month and 30% year-over-year. The rise in global crude oil supplies due to the decline in outages could have a negative impact on crude oil prices (BNO) (USO) (UCO) (PXI) (XOP) (USL) (ERX). Global crude oil supply outages were at 3.6 MMbpd in May 2016—the highest since 2011. For more on crude oil prices, read Part 1 of this series.

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  • Non-OPEC oil producers’ supply outages fell by 50,000 bpd to 0.33 MMbpd in December 2016—compared to the previous month. Yemen and Sudan had major production outages among non-OPEC producers in December 2016.
  • OPEC oil producers’ supply outages fell by 22,000 bpd to 1.9 MMbpd in December 2016—compared to the previous month. Libya, Nigeria, Kuwait, and Saudi Arabia had production outages among OPEC members in December 2016.
  • The EIA estimated that Nigeria’s crude oil production fell by ~30,000 bpd to 1.5 MMbpd in December 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 30,000 bpd to 2.1 MMbpd in December 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 rise in global crude oil supplies due to the decline in global 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 ExxonMobil (XOM), Chevron (CVX), Denbury Resources (DNR), Stone Energy (SGY), and Cobalt International Energy (CIE).

For more on crude oil prices, read OPEC, Russia, and the US Will Impact Crude Oil in 2017, What Can Investors Expect in the Crude Oil Market in 2017, and US Election: How Will It Impact the Stock and Energy Markets.

Read Will Crude Oil Prices Test 3 Digits Again and Why Is the EIA Bullish on Crude Oil Prices in 2017 and 2018? for more on crude oil price forecasts.

For more industry analysis, visit Market Realist’s Energy and Power page.

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