OPEC’s crude oil production
A Reuters survey estimates that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production fell by more than 1 MMbpd (million barrels per day) to 32.27 MMbpd in January 2017—compared to the previous month. The fall in OPEC’s production supported crude oil (BNO) (PXI) (USO) (UCO) prices on January 31, 2017. Higher crude oil prices will have a positive impact on oil producers such as ExxonMobil (XOM), Chevron (CVX), Stone Energy (SGY), and Cobalt International Energy (CIE). For more on crude oil prices, read Part 1 in this series.
OPEC’s monthly production fell due to the decrease in production from:
- Saudi Arabia – production fell below 10.1 MMbpd
- Iraq – production fell by 160,000 bpd (barrels per day)
- Kuwait – production by 100,000 bpd
OPEC and historic production cut deals
OPEC’s crude oil production hit a record 33.7 MMbpd in November 2016. Below are the historic production cut deals for OPEC and non-OPEC producers since September 2016 to support oil prices.
- oil producers’ meeting in Istanbul
- major oil producers’ meeting in Algeria
- OPEC’s production cut meeting on November 30, 2016
- OPEC and non-OPEC producers’ production cut meeting in December 2016
OPEC’s crude oil production fell in January 2017 due to the historic deals mentioned above. A Reuters survey showed that OPEC producers had 82% compliance with its targeted output cuts in January 2017. It’s above most market forecasts.
EIA’s crude oil production estimates in 2017
OPEC’s crude oil production averaged ~31.7 MMbpd and ~32.8 MMbpd in 2015 and 2016, respectively. The EIA (U.S. Energy Information Administration) estimates that OPEC’s crude oil production will average ~33.2 MMbpd in 2017 and ~33.7 MMbpd in 2018.
Higher OPEC production could pressure crude oil (FENY) (SCO) (RYE) (BNO) prices in 2017. However, OPEC’s production is expected to be ~32.5 bpd in the next six months due to the production cut deal. Read What Will Happen if the Oil Producer Meeting Succeeds? to learn more. The expectation of OPEC’s slowing crude oil production could have a positive impact on crude oil prices in 2017.
In the next part of this series, we’ll analyze how US crude oil production impacts crude oil prices.