OPEC’s crude oil production
A Bloomberg survey showed that OPEC’s crude oil production decreased by 170,000 bpd (barrels per day) to 32.04 MMbpd (million barrels per day) in March 2018—compared to the previous month. In March, OPEC had the lowest output since April 2017. OPEC’s production decreased due to lower production from Venezuela, Algeria, Libya, and Saudi Arabia.
The news of a drop in OPEC’s crude oil production supported oil prices on April 3, 2018. Brent and WTI crude oil prices increased 0.7% and 0.8%, respectively, on April 3, 2018. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) increased ~1.8% and ~2.1%, respectively, on April 3, 2018. XOP follows the S&P Oil & Gas Exploration & Production Select Industry Index. XLE tracks the Energy Select Sector Index.
The United States Brent Oil ETF (BNO) and the United States Oil ETF (USO) follow Brent and the US crude oil futures, respectively. BNO and USO have risen ~57.6% and 47.1%, respectively, since June 21, 2017.
On March 26, 2018, Saudi Arabia’s crown prince said that Saudi Arabia and Russia are working together on a long-term production cut strategy. On April 3, 2018, the Ministry of Energy said that a joint organization for cooperation between OPEC and non-OPEC producers might be set up after the ongoing production cuts expire in December 2018.
OPEC’s higher compliance with supply cuts could draw down global oil inventories and support oil prices. Another supply cut extension in 2019 could also benefit oil prices. An unexpected supply outage from Libya, Iraq, and Venezuela could also benefit oil prices.
Read Crude Oil Prices Could Fall in the Next Few Quarters and US Natural Gas Futures Close to 3-Week High: What’s Next? for the latest updates on crude oil and natural gas.