Russia’s Crude Oil Production Hit a 1-Year Low


Sep. 12 2017, Updated 1:06 p.m. ET

Russia’s crude oil production  

Russia is the largest crude oil producer in the world. Russia’s energy ministry estimates that the country’s crude oil production fell by 40,000 bpd (barrels per day) to 10.91 MMbpd (million barrels per day) in August 2017—compared to July 2017. Russia’s crude oil production is at the lowest level since August 2016.

Production fell due maintenance work in the offshore arctic and OPEC’s output cut deal. A fall in Russia’s crude oil production has a positive impact on crude oil (XLE) (XOP) (UCO) prices.

Higher crude oil (RYE) (VDE) (PXI) (USL) prices have a positive impact on oil producers’ earnings like Rosneft, Noble Energy (NBL), Stone Energy (SGY), and PDC Energy (PDCE).

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Russia’s crude oil production estimates  

Russia’s crude oil production averaged ~11.0 MMbpd in 2016—the highest level in the last 30 years. Market surveys estimate that Russia’s crude oil production could average 11.1 MMbpd in 2017.

Russia’s oil exports through oil pipelines 

Russia’s oil exports through oil pipelines rose to 4.34 MMbpd in August 2017. The exports were at 4.1 MMbpd in July 2017. A rise in oil exports is bearish for crude oil (XLE) (XOP) prices.

Russia and production cut deal  

Russia agreed to cut its production by 300,000 bpd from January 2017 until March 2018 due to the production cut deal. Russia’s crude oil production was at 11.24 MMbpd in October 2016. Russia’s production has fallen ~3% since October 2016.

The fall in production could benefit crude oil (ERY) (ERX) prices. The expectation of a production cut deal extension beyond March 2018 could also support crude oil (FENY) (FXN) prices. Higher crude oil prices have a positive impact on oil producers’ earnings such as Rosneft, Stone Energy, and PDC Energy.

In the next part, we’ll discuss some crude oil price forecasts.


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