Oil Rises As Russia Looks to Support Continued Production Cuts

Lloyd Doyle
June 13, 2019

On the production side, Russian Federation said on Monday it might support an extension of supply cuts that have been in place since January, warning oil prices could fall as low as $30 per barrel if producers supply too much crude. Both Ministers are due to meet colleagues from the Organisation of Petroleum Exporting Countries and allied producers at talks in Vienna in the coming weeks to decide on the future of the deal.

U.S. President Donald Trump on Wednesday said he had a feeling that a trade deal could be reached, while again threatening to increase tariffs on Chinese goods if they do not make a deal.

On Monday's (June 10th) market, crude rally was nearly entirely goaded by a signal of OPEC-kingpin Saudi Arabia, that the club of oil producers including Russian Federation would restrict supply to current level beyond June in order to balance a stormy crude oil market amid an intransigent USA inventory rise.

Russian Energy Minister Alexander Novak made the announcement during a meeting of the World Economic Forum in Strasbourg, France, which witnessed the participation of Saudi Energy Minister Khalid Al-Falih and Robert Dudley, group Chief Executive of BP.

The EIA on Tuesday cut its forecasts for 2019 world oil demand growth and US crude production.

There is nearly unanimous agreement in OPEC to extend oil-production cuts, and holdout Russian Federation could come on board before the deal's expiry at the end of June, according to Saudi Arabia.

"With the Mexican stalemate averted and no harmful shockwaves from this weekend G-20 meeting. oil could trade favorably as WTI and Brent will continue to track the broader risk environment high", Innes said. "We are working to take preventative steps to avoid the scenario that was discussed", Falih said regarding the prospects of prices falling to $30 a barrel, in translated comments.

At 485.5 million barrels, US commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year, the EIA said.

Oil prices rebounded slightly at the end of the week on the news that OPEC+ will probably continue its output cuts throughout the year.

US sanctions on Iran and Venezuela are likely to tighten the market, many analysts forecast, while US-China trade tensions could dampen global oil demand. And the joint OPEC+ meeting is scheduled in early July.

State oil giant Saudi Aramco is looking at "multiple" projects in Russia, Al-Falih told Tass.

Other reports by Iphone Fresh

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