5 Jul

OPEC’s Crude Oil Exports: Bullish or Bearish for Traders?

WRITTEN BY Gordon Kristopher

OPEC’s crude oil production 

Bloomberg surveys show that OPEC’s crude oil production rose by 260,000 bpd (barrels per day) to 32.55 MMbpd (million barrels per day) in June 2017—compared to the previous month. Production rose due to higher production from Saudi Arabia, Libya, and Nigeria.

Libya and Nigeria contributed to an ~130,000 bpd rise in OPEC’s crude oil production in June 2017. Saudi Arabia’s crude oil production rose by 90,000 bpd in June 2017. The rise in crude oil production from OPEC is bearish for crude oil (IEZ) (USL) (SCO) prices.

OPEC’s Crude Oil Exports: Bullish or Bearish for Traders?

OPEC’s crude oil exports

Reuters estimates that OPEC’s crude oil exports rose by 450,000 bpd to 25.92 MMbpd in June 2017—compared to the previous month. OPEC’s crude oil exports increased for the second consecutive month in June 2017. Exports also rose by 1.9 MMbpd—compared to the same period in 2016. High OPEC production and exports are bearish for crude oil prices. Lower crude oil prices have a negative impact on oil and gas producers such as Apache (APA), PDC Energy (PDCE), Hess (HES), and Comstock Resources (CRK).

OPEC’s production cut deal

OPEC and non-OPEC producers entered into a production cut deal on May 25, 2017, to reduce crude oil production by 1.8 MMbpd from January 2017 to March 2018. Saudi Arabia stated that it would reduce its crude oil exports to Asia and the US. The production cut would help remove excess global crude oil inventories in 3Q17. It would help rebalance the oil market and might support oil prices. To learn more, read Saudi Arabia’s Real Crude Oil Production and Export Plans.

In the next part, we’ll analyze how Iran’s crude oil production and exports impact oil prices.

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