Wednesday, May 3, 2017

Russia Said To Back Extending OPEC Deal After Hitting Target

Goal of cutting output by 300,000 barrels a day met on May 1; Russia sees sense in extending output deal for six months.

By Elena Mazneva and Stephen Bierman
May 3, 2017

Russia considers it sensible to extend the existing deal with OPEC to curb crude output for at least six months, given current market dynamics, according to a government official with knowledge of the matter.

Russia exceeded its target of cutting production by 300,000 barrels a day from October levels by 790 barrels a day on May 1, said the official who asked not to be identified as the information isn’t public. The world’s largest energy exporter will maintain that output level through June under the current deal.

Russia and other non-OPEC producers last year joined the Organization of Petroleum Exporting Countries’ effort to eliminate a global crude surplus by curbing output by a total of 1.8 million barrels a day. Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih said last week that he planned to meet his Russian counterpart Alexander Novak before OPEC ministers gather in Vienna on May 25 to decide whether to extend the deal.

Russia is satisfied with the way global inventories are declining, the official said. Oil production increases in some countries are more than offset by growing demand and good compliance with output cuts from nations cooperating with OPEC, the person said.

Russian oil production in April fell 0.5 percent from a month earlier to 10.995 million barrels a day, according to data emailed from the Russian Energy Ministry’s CDU-TEK unit on Tuesday. The monthly average was about 252,000 barrels a day below the October level.

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