Can OPEC and Russia Rescue the Oil Market?


Nov. 20 2020, Updated 4:37 p.m. ET

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 rose by 90,000 bpd (barrels per day) to 31.71 MMbpd (million barrels per day) in April 2017—compared to March 2017. Production rose for the first time in the last five months. Production fell from December 2016 to March 2017 due to major producers’ production cut deal. Production fell by 1.5 MMbpd, or 4.7%, from the peak in November 2016.

The fall in OPEC’s production is bullish for crude oil (FENY) (FXN) (SCO) prices. Higher crude oil prices have a positive impact on oil and gas producers’ earnings like ExxonMobil (XOM), Denbury Resources (DNR), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).

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Russia’s oil production

The EIA estimates that Russia’s oil production fell by 51,000 bpd (barrels per day) to 11.22 MMbpd in April 2017. Production fell to meet the targeted production cut in April 2017. It’s the lowest production level since August 2016. Read Russia’s Crude Oil Production Fell in April: What’s Next? to learn more.

Saudi Arabia and Russia’s production plans

On May 15, 2017, Saudi Arabia and Russia favored extending major producers’ production cut deal for nine more months. OPEC and non-OPEC producers plan to cut production by 1.8 MMbpd from July 2017 to March 2018. OPEC’s meeting is scheduled on May 25, 2017. The meeting could result in an official extension of major producers’ production cut deal. However, a rise in supplies from the US, Brazil, Libya, and Nigeria could delay rebalancing in the oil market.

Next, we’ll analyze OECD’s crude oil inventories in April 2017.


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