SINGAPORE: Oil prices edged lower on Monday after rising 2 percent in the previous session as investors downplayed the impact of Russian output cuts, instead focusing on short-term demand concerns stemming from refinery maintenance in Asia and the United States. Gave.
Prices rose on Friday after Russia, the world’s third-biggest oil producer, said it would cut crude output by 500,000 barrels per day (bpd), or about 5 percent, in March in response to Western sanctions imposed on its exports. in retaliation. In response to the Ukraine conflict.
Brent crude futures fell 69 cents, or 0.8 percent, to $85.70 a barrel by 0153 GMT after gaining 2.2 percent on Friday. US West Texas Intermediate crude was down 68 cents, or 0.9 percent, at $79.04 a barrel after rising 2.1 percent in the previous session.
“The weakness we’re seeing in morning trading today is leading the market to realize that these cuts are already taking place in a big way,” ING analyst Warren Patterson said in a note.
Both contracts rose more than 8 percent last week, buoyed by hopes of a recovery in demand in China, the world’s top crude importer and No. 2 oil consumer, after COVID restrictions were eased in December.
China’s improving oil demand is curbing its gasoline exports in February, though its refiners are maintaining diesel shipments above 2 million tonnes.
Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, said a 500,000 bpd cut would bring Russia back in line with its OPEC+ quota as Moscow currently exceeds exports.
The Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia, a grouping known as OPEC+, agreed in October to cut production by 2 million bpd, about 2 percent of world demand.
OPEC country officials told Reuters that oil prices could return to $100 a barrel again later this year on a recovery in Chinese demand and limited supply growth due to lack of investment.
In the United States, the world’s biggest oil producer, the number of operating oil rigs rose by 10 last week to 609, the biggest weekly add since June, according to a Baker Hughes report on Friday.