Russia Could Cut Oil Production at Faster Pace - Energy Minister Novak

Rising tensions between the USA and major oil-producing nations has some analysts speculating that geopolitical risk could lead to higher oil prices in the coming weeks. He also attributed the climb to bullish production data. This has increased the possibility of future sanctions, which in turn could lead to a cut in oil supply. January's non-farm payroll data to come out of the US later today will be watched as a catalyst for late gold price movement today and Monday.

Russian Federation has said it would cut production by 200,000 bpd by the end of the first quarter and by 300,000 bpd thereafter.

Both Brent crude and WTI prices fell on Thursday after official data showed that US stockpiles rose by 6.5 million barrels. That energized bulls to push crude upward, he said.

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 US shale, increasing competition for market share longer term.

A Reuters survey this week put compliance with the OPEC production agreement at 82 per cent, with January output cut by more than one million bpd in January.

They said Russia's oil output averaged at 1.516 million tonnes per day, or 11.11 million bpd last month.

A source in the country's Energy Ministry told Trend that the volume of daily production in January amounted to some 793,900 barrels, with some 50,800 barrels falling to a share of condensate.

A Russian cut of 100,000 bpd would be a third of Moscow's pledge to reduce its output by 300,000 bpd. The dollar traded at 113.28 yen during Thursday's Asian session, down from Wednesday's high of 113.95, while the euro showed a slight rebound off Wednesday's low, trading at $1.08125 on Thursday. "But, of course, that assumes the production limits are extended beyond the initial six-month period, which can't be taken for granted", he said.

"The exempted countries spoiled partially the effectiveness of the aggressive Saudi cut", as well as the reductions from other Persian Gulf countries, said Giovanni Staunovo, analyst at UBS Group AG.

  • Anthony Vega