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What Could Drive Crude Oil Prices Higher?

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Updated

API’s crude oil inventories 

The API (American Petroleum Institute) will release its crude oil inventory report on November 7, 2017. A Bloomberg survey estimated that nationwide crude oil inventories would fall by 2.45 MMbbls (million barrels) on October 27–November 3, 2017.

A larger-than-expected fall in US crude oil inventories could support crude oil (BNO) (UWT) (DWT) prices. US crude oil inventories fell 15% from their peak in March 2017 for the week ending November 3, 2017, which also helped oil (USO) (UCO) prices.

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Iraq’s crude oil production 

Reuters estimates that Iraq’s crude oil production fell by 120,000 bpd (barrels per day) to 4,380,000 bpd in October 2017—compared to the previous month. Production fell due to the supply outages in Kurdistan. The supply outages helped crude oil (BNO) (DBO) (SCO) prices in October. Crude oil prices are near a three-year high, which could benefit oil producers (RYE) (XOP) like Apache (APA), Stone Energy (SGY), Continental Resources (CLR), and Denbury Resources (DNR).

Iraq and Kurdistan 

Iraq rejected Kurdistan’s independence referendum in September 2017. As a result, it seized the oilfields in Kurdistan in October 2017. The conflict hampered crude oil production and exports by ~550,000 bpd.

In late October 2017, Iraq started pumping from the seized oilfield in Kurdistan. Iraq resumed production after the supply outage, which pressured crude oil (BNO) (UWT) (DWT) prices. Iraq is the second-largest oil producer in OPEC after Saudi Arabia. Changes in oil (SCO) (DBO) prices impact energy producers’ (IXC) (IYE) profitability.

In the next part, we’ll discuss how the US dollar impacts oil prices.

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