Oil prices experienced a decline on Thursday following comments made by Russian Deputy Prime Minister Alexander Novak, minimizing the likelihood of additional production cuts by OPEC+ at its upcoming meeting.
At 0815 GMT, Brent crude futures dropped by 41 cents, equivalent to a 0.5% decrease, reaching $77.95 per barrel. Similarly, U.S. West Texas Intermediate crude (WTI) fell by 51 cents or 0.7%, settling at $73.83.
Novak was quoted by Izvestia newspaper, stating, “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.”
In the previous session, oil prices were supported by a cautionary statement from Saudi Arabia’s energy minister, warning short-sellers speculating on a decrease in oil prices to exercise caution.
Some investors interpreted this as a potential indication that OPEC and its allies, including Russia (collectively known as OPEC+), might contemplate further output cuts during their meeting on June 4.
Analysts from MUFG bank remarked, “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.”
Price volatility was also influenced by uncertainty surrounding U.S. debt concerns.
House Speaker Kevin McCarthy stated that while some progress had been made in U.S. debt ceiling negotiations, several unresolved issues remained as the deadline approached for raising the federal government’s borrowing limit of $31.4 trillion, risking a potential default.
Negotiations between Democratic President Joe Biden and top congressional Republican Kevin McCarthy reconvened at the White House on Wednesday in an attempt to reach a resolution.
Despite these factors, the decline in oil prices was curtailed by an unexpected and substantial decrease in U.S. crude oil inventories reported by the Energy Information Administration on Wednesday.
U.S. crude inventories plummeted by 12.5 million barrels to 455.2 million barrels due to declining imports, defying expectations of an 800,000-barrel increase. The EIA also noted a decline of 2.1 million barrels in gasoline inventories, totaling 216.3 million barrels, while distillate stockpiles fell by 600,000 barrels to 105.7 million barrels.
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