Russia blames missed oil target on rise in gas condensate output

Installation work at the Moscow oil refinery is shown in this photo taken in 2017. (Shutterstock image)
Updated 21 October 2019

Russia blames missed oil target on rise in gas condensate output

  • Output falls but remains above global production cap as minister vows country will work to fulfill its obligations
  • OPEC, Russia and other oil producers, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from the start of this year

MOSCOW: Russia produced more oil in September than envisaged by a global deal due to an increase in gas condensate output as the country prepared for winter, local news agencies reported on Sunday.

Russian oil output edged down to 11.25 million barrels per day (bpd) last month from August’s 11.29 million bpd, but remained above the cap set under the global production deal.

Under the accord reached between the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, Russia has agreed to reduce output by 228,000 bpd from an October 2018 baseline.

Energy Minister Alexander Novak has said the reduction totaled 200,000 bpd last month. He reiterated that the country would strive to fulfil its obligations this month in full.

“We had specific obligations related, among other factors, to dealing with the winter period, with the production of gas condensate,” TASS news agency quoted Novak as saying.

Output of gas condensate, a light oil, is included in Russian statistics on total oil production.

OPEC, Russia and other oil producers, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from the start of this year.

OPEC and its allies will meet on Dec. 5-6 in Vienna to review output policy.

Market participants believe the group known as OPEC+ could decide to extend production cuts “and wait until world demand catches up with the supply situation,” Andy Lipow, president of Lipow Oil Associates in Houston said last week.

OPEC Secretary-General Mohammad Barkindo has said deeper output cuts are an option and that OPEC would do what it could with allied producers to sustain oil market stability beyond 2020.

OPEC, Russia and other producers have agreed to cut oil output by 1.2 million barrels per day until March 2020.


Oil recoups losses as OPEC, US Fed see robust economy

Updated 14 November 2019

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.

HIGHLIGHT

  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.