Oil Futures Rise as Russia Mulls Extension to Current Cut Levels
By Adedapo Adesanya
Crude futures pulled an upward movement on Tuesday, November 3 on news that Russia is reportedly considering the idea that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) delays the easing of the production cuts.
Russian Energy Minister, Mr Alexander Novak, in a discussion with local oil executives, is mulling fresh ideas to help the market and this includes an option to extend the cuts for three months until March 2021, instead of easing the cuts from January as planned.
The OPEC+ group, in which Russia is the leader of the non-OPEC producers, currently plans to taper the 7.7 million barrels per day collective cut by 2 million barrels per day beginning in January 2021.
However, with the second coronavirus wave sweeping across the United States and Europe, and already prompting the return of lockdowns and weakening demand, this decision may have to be halted to accommodate friendly measures.
Some other European countries have joined France and Germany in announcing second lockdowns amid surging coronavirus cases. The market fears that the return of the lockdowns will further delay the economic and oil demand recovery.
As the number of infections surge and hospitals and intensive care units fills up, countries including Austria, Belgium, Italy, the Netherlands and Spain have once more introduced tough curbs on movement and gatherings.
But the reports of an extension to the current output cut pushed the price of the Brent higher at the market on Tuesday by 92 cents or 2.36 per cent to $39.89 per barrel, while the West Texas Intermediate (WTI) crude futures moved up by 2.8 per cent or $1.03 to trade at $37.82 per barrel.
Another factor responsible for this rise yesterday was the presidential election in the United States and traders are watching with keen interest who emerges the next President for the next four years. The contest is between President Donald Trump and former Vice President Joe Biden.