Crude lower as Russia Adds Uncertainty to OPEC Production Cut

Oil is lower on Monday as Russia has not issued a strong signal on its willingness to agree to further supply cuts. The deal between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, Russia included, agreed to a production cut that stopped the free fall of crude prices. Stability and disruptions to energy supplies boosted crude to levels where $100 forecasts were not uncommon.

West Texas Intermediate graph

Supply has remained plentiful with the US issuing waivers to Iran’s largest clients to avoid a sharp rise in prices. Saudi Arabia and the OPEC have been targeted by US President Trump to increase supply to keep prices low, but with the kingdom so dependant on oil revenue it becomes a hard task to fulfil. Saudi Arabia appears to be pushing for cuts, but it might not be as easy to convince Russia.

Russian Energy Minister Alexander Novak has been supportive of the idea of lower supply, if it keeps prices from falling once again, but his comments on monitoring supply and demand in the coming weeks is proof there won’t be a decision in the short term.

Brent crude graph

The OPEC meets in December 6 with Saudi Arabia leading the charge for another round of production curbs.

The meeting between China and the United States ahead of the G20 meeting in Buenos Aires will impact commodities. Global growth has been under pressure as a trade dispute between the two largest economies is oil negative as demand dries up.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza