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Global Crude Oil Supply Outages Near 5-Year Low

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Nov. 20 2020, Updated 12:48 p.m. ET

Global crude oil supply outages

The US Energy Information Administration estimates that global crude oil supply outages fell by 247,000 bpd (barrels per day) to 2.0 MMbpd (million barrels per day) in June 2017 compared to in May 2017. The outages are at their lowest level since October 2012. Supply outages fell 11.2% month-over-month and 36% year-over-year (YOY).

The fall in global crude oil supply outages will likely have a bearish impact on crude oil (PXI) (IEZ) (DIG) (IYE) prices. Global crude oil supply outages hit 3.6 MMbpd in May 2016, the highest level since 2011. Prices recovered from their 13-year low in June 2016 due to supply outages in May 2016. Lower crude oil prices could have a negative impact on the earnings of oil and gas producers such as Bill Barrett (BBG), Chevron (CVX), Hess (HES), and Bonanza Creek Energy (BCEI).

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Global crude oil supply outages 

  • OPEC producers’ crude oil supply outages fell by 170,000 bpd to 1.37 MMbpd in June 2017 compared to May 2017. It was the lowest level since January 2016. OPEC members Libya, Nigeria, Kuwait, Iraq, and Saudi Arabia had production outages in June 2017. Libya and Nigeria had the highest production outage in June 2017 among OPEC members.
  • Non-OPEC oil producers’ supply outages fell by 77,000 bpd to 0.60 MMbpd in June 2017 compared to May 2017. Supply outages are at a four-month low. Canada, Yemen, and Sudan had major production outages among non-OPEC producers in June 2017.
  • Global crude oil supply outage fell due to the fall in supply outage in Libya and Nigeria in 2017. Libya’sNigeria’s crude oil supply outage has fallen 57% since August 2016. Libya’sNigeria’s crude oil supply outage has fallen 61% since May 2016.

Impact of rising global crude oil supply outages

The fall in global crude oil supply outage could lead to a rise in global crude oil supplies. An oversupply could pressure crude oil prices. Lower crude oil prices could have a negative impact on oil and gas producers’ earnings such as Bill Barrett (BBG) and Bonanza Creek Energy (BCEI).

In the next article, we’ll discuss OPEC’s spare production capacity and its impact on crude oil prices.

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