Oil prices down as Russian output remained unchanged in February

Oil prices fell in trading on Thursday after reports that Russia did not comply with its supply cut commitments in February. Linn Energy photo.

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.

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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.”