Oil prices down over 2 per cent in Thursday trading
Oil prices fell over two per cent on Thursday after reports showed Russian oil production was unchanged in February.
Russia was one of the non-OPEC producers that signed on to the cartel’s supply cut deal in late 2016, however, last month, Russia’s oil output was unchanged from January at 11.11 million b/d.
Instead of adhering to the plan to decrease production, Russia maintained cuts at 100,000 b/d, a third of the levels agreed to by Moscow.
Both benchmarks fell by 2.3 per cent. Brent futures were $1.28, or 2.3 per cent, lower at $55.08barrel and US crude settled $1.22, or 2.3 per cent, at $52.61.
Another factor in the price drop was the strong US dollar which made it more expensive for buyers in other currencies. The dollar rose to seven-week highs against a number of currencies after the Federal Reserve official hinted at a near-term interest rate hike.
Despite Russia’s non-compliance, OPEC has shown an overall strong compliance with the group’s deal. In February, producers were able to maintain 94 per cent adherence to the deal, according to a Reuters survey.
Reuters reported Tim Evans, Citi Futures energy specialist wrote in a note “While constructive, we continue to view Saudi Arabia’s willingness to sacrifice market share beyond its commitment to OPEC as more of a temporary sprint than a more sustainable effort.”