Russia's Oil Output Down by 100000 Bpd in January

Feb 04, 2017, 00:29
Russia's Oil Output Down by 100000 Bpd in January

The agency's head of oil industry and markets believed that while OPEC countries and their partners in supply cuts such as Russian Federation want to keep oil prices in the mid to high $50s range it is also not in their interests for prices to go much beyond that. OPEC agreed to cut a collective 1.2 million barrels per day from its production and non-members agreed to about half that.

Global oil output was cut by 1.4 million barrels per day (bpd) last month, Russian energy minister Alexander Novak told President Vladimir Putin on Wednesday, citing preliminary data. Brent, for most of the past two months, have been trading between $53 and $58 a barrel, at a premium of around $2.50 to the US crude futures contract.

Reuters is quoted as saying Brent crude futures rose to $56.84 a barrel from $56.56 previously.

Russian Federation cut production in January by around 100,000 barrels per day (bpd), according to data seen by Reuters. That brought the total count to 566, the most since November 2015.

"The release of the American Petroleum Institute's crude inventories at a much higher than expected 5.8 million barrels saw both Brent and WTI quickly give back... gains", said Jeffrey Halley, senior market analyst future brokerage OANDA in Singapore. This has increased the possibility of future sanctions, which in turn could lead to a cut in oil supply. The geopolitical risk around the situation is being considered by traders as a potential factor that could again affect Iran's worldwide oil exports. At the same time, rising tension between Iran and the US over a ballistic missile test by Tehran this week has led to some sharp words from the White House. They rose $1.07 to close at $53.88 the day before.

Prices into the mid $60s for any sustained period of time would lead to greater investment in other parts of the world where oil extraction is more expensive, such as USA shale, increasing competition for market share longer term.

ICE gasoil for February changed hands at $497.75 a metric ton, down $3.00 from Thursday's settlement.

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