OPEC’s crude oil production in October 2017
Reuters estimates that OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production fell by 80,000 bpd (barrels per day) to 32,780,000 bpd in October 2017—compared to the previous month. OPEC’s crude oil production fell due to ongoing production cuts and the supply outage in Kurdistan. The fall in oil production from Venezuela also caused OPEC’s output to fall.
Any fall in crude oil production from OPEC is bullish for crude oil (BNO) (DWT) (UCO) (USO) prices. It benefits oil producers (IEZ) (XES) like Saudi Aramco, BP (BP), Sanchez Energy (SN), and Total SA (TOT).
OPEC’s compliance with ongoing production cuts
OPEC, Russia, and nine other producers decided to cut oil production by 1,800,000 bpd or 2% from January 2017 to March 2018. Oil (USL) (BNO) (UCO) prices are near a 27-month high partially due to the expectation of extending the ongoing production cuts nine more months. Saudi Arabia and Russia are the major contributors of the current production cuts.
The ongoing production cuts resulted in a fall in US and OECD crude oil inventories. It has led to tighter global supplies, which could benefit crude oil (UWT) (DWT) prices. As a result, high oil prices benefit oil producers (VDE) (XOP) like Devon Energy and Bill Barrett.
Next, we’ll discuss how US crude oil production impacts ongoing production cuts and oil prices.