Oil futures lost ground Thursday after a top Russian official played down the prospect of additional production cuts when OPEC+ meets early next month.
Crude prices were lifted earlier this week, with support tied in part to remarks by Saudi Arabia’s top energy official that were taken as a signal the Organization of the Petroleum Exporting Countries and its allies could move to further cut output at their next meeting.
Price action
-
West Texas Intermediate crude for July delivery
CL00,
-1.75% CLN23,
-1.75%
fell $1.49, or 2%, to $72.85 a barrel on the New York Mercantile Exchange. -
July Brent crude
BRNN23,
-1.58% ,
the global benchmark, was down $1.41, or 1.8%, at $76.95 a barrel on ICE Futures Europe. August Brent
BRN00,
-1.53% BRNQ23,
-1.53% ,
the most actively traded contract, dropped $1.38, or 1.8%, to $76.85 a barrel. -
Back on Nymex, June gasoline
RBM23,
-2.08%
dropped 2.3% to $2.659 a gallon, while June heating oil
HOM23,
-1.62%
was off 1.5% at $2.377 a gallon. -
June natural gas
NGM23,
-1.88%
dropped 1.2% to $2.37 per million British thermal units.
Market drivers
Russian Deputy Prime Minister Alexander Novak told the Izvestia newspaper that he didn’t expect any additional measure to be announced when OPEC+ meets on June 4, Reuters reported. OPEC+ countries in early April announced around 1.15 million barrels a day in production cuts that took effect at the beginning of this month, while Russia pledged to continue cuts of 500,000 barrels a day through year-end.
Novak said he didn’t think there would be any “new steps, because just a month ago certain decisions were made regarding the voluntary reduction of oil production by some countries due to the fact that we saw the slow pace of global economic recovery.”
Earlier this week, Prince Abdulaziz bin Salman warned that oil short sellers should “watch out,” threatening a rerun of the price spike that occurred after output cuts were announced in early April. Analysts took the remarks as a threat that more output cuts may be in store.
See: Top Saudi official says oil speculators had better ‘watch out’
The Saudi remarks hit home because “there is a large speculative gross short in the market and [traders] will likely be hesitant to carry too much risk into the OPEC+ meeting,” wrote Warren Patterson and Ewa Manthey, commodity analysts at ING.
Crude futures ended at three-week highs Wednesday after the U.S. Energy Information Administration reported a weekly decline crude stockpiles for the first time in three weeks, with the more than 12 million-barrel drop the largest year to date.
