Crude erodes as Russia opposed to deeper cuts
hong kong/london — Crude oil fell, snapping the longest winning streak this year, as Russia was said to oppose any proposal to deepen Opec-led production cuts.
Futures dropped 1.7 per cent in New York, snapping eight straight sessions of gains. Russia wants to continue with the current deal and any further supply curbs would send the wrong message to the market, according to government officials.
Russia plans to host a meeting of some ministers from the Organisation of Petroleum Exporting Countries and several non-members in St Petersburg on July 24. They will discuss progress toward eliminating a global supply glut.
Russia’s publicly traded oil producers, both state-led and non-state, have voluntarily reduced output by about 300,000 barrels a day from a post-Soviet record reached in October in order to support prices. Energy Minister Alexander Novak agreed in May to extend that reduction for nine months to the end of the first quarter of 2018.
Part of the government opposes both more cuts and any further prolongation of the deal, another of the people said. The longer the output curbs remain in place, the worse the volatility when producers are released from the accord.
The US dollar gained, reducing the appeal of commodities denominated in that currency.
While prices have surged during the past week, oil remains in a bear
any proposal to cut deeper would result in an overshooting in prices, which will prove self-defeating due to the unprecedented velocity of us shale oil
market after concerns that rising global supply will offset output cuts from the Organisation of Petroleum Exporting Countries and its partners. Libya and Nigeria, exempt from the Opec-led curbs, accounted for half of the group’s production boost last month, according to data compiled by Bloomberg.
“Any proposal to cut deeper
Jan Edelmann, analyst at HSH Nordbank
would result in an overshooting in prices, which would rapidly prove self-defeating due to the unprecedented velocity of US shale oil,” said Jan Edelmann, an analyst at HSH Nordbank in Hamburg. “The rebalancing process in global oil markets is still making progress.”
West Texas Intermediate for August delivery was down 66 cents to $46.41 a barrel on the New York Mercantile Exchange at 10.09am London time.
Brent for September settlement was at $48.97 a barrel on the London-based ICE Futures Europe exchange, down 64 cents.
Deepening cuts would suggest that Opec, Russia and their allies are nervous that the pact to reduce output by a combined 1.8 million barrels a day through March 2018 isn’t doing enough to support prices, one of the Russian officials said. — Bloomberg