Russia’s crude oil production
Russia’s crude oil production rose by 2.1% to 10.9 MMbpd (million barrels per day) in March 2016 compared to March 2015. Russia’s March levels are at their highest crude oil output level since the collapse of the Soviet Union, according to data from the Russian Energy Ministry. Russia produced 10.9 MMbpd (million barrels per day) of crude oil in February 2016. The rise in Russia’s crude oil production raises doubts about the success of the oil producer meeting on April 17, 2016.
Oil producer meeting
OPEC (Organization of the Petroleum Exporting Countries) members have been invited to the oil producers’ meeting on April 17 in Qatar. The meeting is intended to support oil prices. These countries account for about 73% of the global crude oil production. On February 16, Russia, Saudi Arabia, Venezuela, and Qatar decided to freeze crude oil production at January 2016 levels. To learn more about the historic deal, check out Why Crude Oil Prices Fell despite the OPEC and Non-OPEC Deal.
As we’ve discussed so far in this series, it is clear that Iran, Iraq, and Russia have all increased crude oil production from their February 2016 levels. Only Saudi Arabian production fell in February 2016 from the previous month. As a result, Saudi Arabia stated that it would freeze crude oil production only if Iran and other oil producers joined the crude oil production deal to cap crude oil production. The lack of cooperation among major oil producers to freeze crude oil production suggests that the oil producers’ meeting could be a big failure.
The low crude oil prices impact Russian oil and gas operators like the Gazprom PAO (OGZPY), Lukoil (LUKOY), and Tatneft (OAOFY). They also affect US oil producers like Energy XXI (EXXI), QEP Resources (QEP), Warren Resources (WRES), Hess (HES), and Carrizo Oil & Gas (CRZO).
ETFs and ETNs such as the iShares Global Energy ETF (IXC), the PowerShares DWA Energy Momentum (PXI), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), the Vanguard Energy ETF (VDE), and the iShares U.S. Energy ETF (IYE) are also influenced by the ups and downs in the oil and gas market.
Read more about US crude oil production in the next part of the series.
The CFTC added that net long positions held by hedge funds fell for the first time in the last five weeks as hedge funds lost faith that the oil producer meeting will be successful.
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