Crude oil futures edged up during afternoon European trade on Jan. 29 after key Russian producers agreed to direct more of their oil into domestic refineries, which could tighten crude exports next month.
SAt 1350 London time, ICE March Brent crude futures was up 65 cents/b from the Jan. 28 settle at $56.16/b while the NYMEX March light sweet crude contract was 49 cents/b higher at $52.83/b.
Russian oil companies agreed to increase refining throughputs from next month, Deputy Energy Minister Pavel Sorokin said, ahead of an expected rebound in fuel consumption in the coming months.
The OPEC, Russia and several other key producing countries have begun tapering their historic production cuts instituted in 2020, from 9.7 million b/d in May-July 2020 to 7.2 million b/d in January.
However, growing infighting between OPEC+ members could make future meetings on production policy increasingly difficult as the alliance navigates the pandemic recovery, according to a report by the Abu Dhabi Commercial Bank. Any such development would put a ceiling on prices.
The coalition’s last meeting Jan. 4-5 was marked by disagreements, with several countries under fiscal and demographic pressures lobbying for increases in their quotas while other members, led by Saudi Arabia, urged continued output discipline to continue supporting the oil supply-demand balance.
Prices have remained rangebound in the week started Jan. 24. “The expectation of a marked recovery in demand during the course of the year should be priced in by now,” said Carsten Fritsch, energy analyst from Commerzbank.
S&P Global Platts Analytics expects weakness in demand in global oil markets for the first quarter, followed by recovery in the second quarter.