OPEC’s crude oil production
The EIA (U.S. Energy Information Administration) estimates that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production fell by 80,000 bpd (barrels per day) to 32.03 MMbpd (million barrels per day) in March 2017—compared to February 2017.
OPEC’s crude oil production fell 0.3% month-over-month, but rose 0.5% YoY (year-over-year). Production fell due to major producers’ production cut deal. Production fell by 1.33 MMbpd from the peak in November 2016. It’s at the lowest level since April 2016.
The fall in OPEC’s production supported crude oil (IXC) (IYE) (FENY) prices. As a result, crude oil prices are near a one-month high. A Reuters survey estimated that OPEC showed 82%, 94%, and 95%, compliance with targeted production cuts in January 2017, February 2017, and March 2017. Higher compliance among OPEC members is bullish for crude oil prices. High crude oil prices have a positive impact on oil and gas producers’ earnings like QEP Resources (QEP), ExxonMobil (XOM), Warren Resources (WRES), and Hess (HES).
Major oil producers’ plan in the coming months
Six OPEC members and Oman expressed interest in extending major producers’ production cut deal in 2H17. The deal is expected to remove surplus oil from the oil market. Major producers’ production cut deal would help rebalance the oil market.
Iraq, Kuwait, Libya, and the United Arab Emirates’ production fell in March 2017, according to the EIA. Saudi Arabia’s larger-than-expected production cuts in January 2017 and February 2017 already supported oil prices. Its production rose by 60,000 bpd to 10.06 MMbpd in March 2017—compared to the previous month. Saudi Arabia, Kuwait, and Iraq want crude oil prices at higher levels. As a result, they would support the extension of major producers’ production cut deal in 2H17.
On April 17, 2017, Saudi Arabia’s energy minister said that higher compliance among OPEC members with targeted production cuts and the beginning of oil market rebalancing could support oil prices. OPEC’s meeting is scheduled on May 25, 2017.
In the next part, we’ll analyze Russia’s crude oil production.