Oil Prices Lower on Russia’s Signal to Increase Output

Oil prices were lower on Friday morning in Asia, with Russia hinting that it may increase output.

Crude oil WTI futures for delivery in July traded at $70.63 per barrel, or 0.11 percent lower. Brent crude futures for delivery in July, which are traded in London, were at $78.67 per barrel, or 0.15 percent lower.

Shanghai Crude Oil WTI Futures for September delivery were 0.50 percent lower at 480.60 yuan, or $75.25, per barrel.

The Organization of Petroleum Exporting Countries (OPEC), along with a group of non-OPEC producers headed by Russia, began an initiative to cut global oil supplies in 2017 to curb a worldwide supply glut and to prop up prices. The group had an agreement to cut their output by about 1.8 million barrels per day.

However, Russia has manifested eagerness to end the production cuts, with its energy minister Alexander Novak stating that the restrictions on oil production could be eased “softly” if OPEC and non-OPEC countries witness the oil market becoming balanced in June.

On June 22, OPEC members and non-OPEC participants are set to meet in Vienna.

Prices will definitely be affected by any sign that the organization may be leaning towards an early exit from the supply cut.

Oil prices have risen by nearly 20 percent since the end of 2017. Even though Russia and OPEC benefit from spurred oil prices, their voluntary production cuts have enabled other producers to bolster their output and gain some market shares.

US crude oil production has increased by more than a quarter during the last couple of years to 10.73 million barrels per day. Russia solely produces more at nearly 11 million barrels per day.

Meanwhile, geopolitical risks are still the largest factor that keeps oil markets on the edge. US sanctions on Iran, which is the producer of 4 percent of global oil supplies, will likely bring about shortages later this year when the trade restrictions are finally implemented.

The ongoing economic crisis in Venezuela has already caused the production in the country to plummet to the lowest level.

Amid all these concerns, OPEC and Russia could ramp up production as early as June to make up for the decreased supply.

Meanwhile, gold prices slipped as the dollar stayed put against other currencies in Asia during the late morning trade on Friday.

Gold futures for June delivery on the Comex division in the New York Mercantile Exchange were 0.18 percent lower at $2.4 to $1,301.9 a troy ounce.

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