Oil futures closed lower after reports emerged that Russian Energy Minister Alexander Novak said Russia’s oil output cuts in August will be slightly smaller those agreed to under the deal between OPEC and non-OPEC producers.
RIA and Interfax news agencies quoted Russian Energy Minister Alexander Novak as saying he will discuss the agreement and the state of the oil market at OPEC's Joint Ministerial Monitoring Committee meeting on Sept. 12
As for OPEC, the group is facing a weaker demand outlook due to slowing global growth. In July, OPEC ministers agreed to a nine-month extension Opens a New Window. of its previous deal to cut production. That deal reduced production by 1.2 million barrels per day starting Jan. 1. After July’s meeting, the deal was extended through March 2020
OPEC oil output rose in August for the first month this year, with members of the group pumping 29.61 million barrels a day, up 80,000 barrels a day from July’s revised figure, according to the results of a Reuters survey reported Friday.
Earlier this week, OPEC’s Joint Ministerial Monitoring Committee, which monitors OPEC and non-OPEC member compliance with the cuts, pegged overall conformity at 159% in July, up 22% from June.
Monday saw the US benchmark WTI crude for October delivery fall $1.61, or 2.8%, to settle at $55.10 a barrel on the NYMEX. It’s been a tough August for crude, with the commodity slipping into a bear market. Front-month prices for the U.S. benchmark suffered a 5.9% monthly decline, according to Dow Jones Market Data.
The effect of Russian oil production on market sentiment has never been more pronounced. Whilst the market has always acknowledged Russian oil production, the announcement of slightly higher production figure now seems to have a similar effect to an EIA crude inventory report. Advance notification of such information could be financially very lucrative in the right hands, certainly if the intention was to short the market.
Forecasted contracting demand for global oil has made any unexpected increase in production a fundamental reason for declining crude oil benchmarks. It now seems clear that Russian oil production has the ability to swing the market