Oil Prices Dip on Thursday as Russia Downplays Prospect of OPEC+ Production Cuts

Global oil prices declined on Thursday following comments from Russian Deputy Prime Minister Alexander Novak that OPEC and allies, known as OPEC+, won’t be cutting oil production at its next meeting scheduled for next week.

The comment led to a slight decline in oil prices with Brent crude oil, against which Nigerian oil is priced, shedding 41 cents, or 0.5% to $77.95 a barrel at 2:10 pm Nigerian time while the U.S. West Texas Intermediate crude oil dipped by 51 cents, or 0.7% to $73.83 a barrel.

“I don’t think that there will be any new steps, because just a month ago certain decisions were made regarding the voluntary reduction of oil production by some countries…” Izvestia newspaper quoted Novak as saying.

On Wednesday, oil prices were aided by a warning from Saudi Arabia’s energy minister that short-sellers betting oil prices will fall should “watch out” for pain.

Some energy investors took that as a sign that the cartel could consider further production cuts at its meeting scheduled for June 4.

“The obvious reading is that the Kingdom may either unilaterally cut oil production or orchestrate a wider OPEC+ reduction …thereby supporting prices and stinging speculators that are shorting oil,” analysts at bank MUFG said.

A check by Investors King also showed that the ongoing uncertainty surrounding U.S. debt is also weighing on crude oil prices.

Some progress had been made but several issues remained unresolved in U.S. debt ceiling negotiations, House Speaker Kevin McCarthy said on Thursday, as the deadline ticked closer to raise the federal government’s $31.4 trillion borrowing limit or risk default.

Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy reconvened Wednesday at the White House to try to close a deal.

Meanwhile, price declines were limited by an unexpected, massive fall in U.S. crude oil inventories in the week to May 19 reported by the Energy Information Administration on Wednesday.

U.S. crude inventories fell by 12.5 million barrels to 455.2 million barrels as imports declined. Analysts had expected an 800,000-barrel rise.

Gasoline inventories dropped by 2.1 million barrels in the week to 216.3 million barrels, the EIA said, while distillate stockpiles fell by 600,000 barrels to 105.7 million barrels.