3 Jul

Oil Bulls Watch Out: Russia’s Production Could Rise in July

WRITTEN BY Gordon Kristopher

Russia’s crude oil production

Russia’s crude oil output increased by 0.82% or 90,000 bpd (barrels per day) to 11, 060,000 bpd in June—compared to the previous month. The production rose above 11 million bpd for the first time since April 2017. Russia’s oil output has increased ahead of the adjustment of the self-imposed supply cuts.

The news of a rise in production from Russia pressured oil prices on July 2. Brent and WTI oil prices fell 2.7% and 0.3%, respectively, on the same day. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell ~2% on July 2. XOP follows the S&P Oil & Gas Exploration & Production Select Industry Index. Halcon Resources (HK), Ultra Petroleum (UPL), Kosmos Energy (KOS), and Centennial Resource Development (CDEV) fell 7.3%, 6.1%, 5%, and 4.7%, respectively, on July 2. These stocks were some of the top percentage losses in XOP’s portfolio during this period. These stocks account for 4% of XOP’s holdings.

Oil Bulls Watch Out: Russia’s Production Could Rise in July

Russia and production cuts 

On November 30, 2017, Russia and OPEC decided to extend the current self-imposed supply cuts until December 2018. Russia agreed to cut its production by 300,000 bpd (barrels per day) as part of the production cut deal. Brent and US oil prices have risen ~73% and ~74% since June 21, 2017, partly due to the current supply cuts.

On June 22, OPEC producers and Russia agreed to increase the production starting in July to bring the production cut compliance back to 100% from higher levels due to unexpected supply drops from member countries.

Impact

Russia’s oil production has increased ~81.3% from 6,100,000 bpd in 1999. According to Russia’s energy ministry, the country could increase its production at least by 300,000 bpd as quickly as possible. Russia’s crude oil export schedule suggests that supplies could rise in July. A rise in the supplies could pressure oil prices.

Next, we’ll discuss US crude oil production.

Latest articles

PayPal stock (PYPL) is trading down today. With earnings due after the market closes, you should buy PayPal stock on the current dip.

This year has been rough for cannabis companies, including Aurora Cannabis (ACB), whose stock is already down 27.82% year-to-date.

The road for Netflix is getting rockier by the day. As it prepares for the imminent streaming wars, it's been caught off guard by a new development.

A Senate bill introduced this week could force Facebook (FB) to support the growth of rivals such as Snapchat. Let's take a closer look.

Over the past five trading sessions, Microsoft stock has closed in the red—making it very attractive for investors before today's earnings announcement.

Solar inverter maker Enphase Energy (ENPH) stock was up more than 4% at 11:10 ET today. ENPH recovered after it fell more than 8% yesterday.