Russian minister dampens oil gains

A one-sentence comment by Russian Energy Minister Alexander Novak curtailed recent gains in oil prices on Friday, sparking a media storm.

Last week’s agreement by OPEC countries to reduce output by some 200,000-700,000 barrels per day in order to help push prices back up is widely seen as contingent on the co-operation of key non-OPEC producers such as Russia, and Novak is expected to hold consultations with OPEC officials in Istanbul next week.

“It will just be consultations,” Novak told Bloomberg News, dampening hopes of an agreement.

Nevertheless, oil remained above USD 50 per barrel, though the December contract for Brent crude went down by about 0.5% to USD 52.27 per barrel while West Texas Intermediate futures were down 0.15% to USD 50.29 per barrel.

Yet some analysts criticised the media response, saying that it is too early to speculate.

“This is what happens when headlines are moving the market instead of fundamentals,” Olivier Jakob from the Switzerland-based research firm Petromatrix told the Wall Street Journal. “Russia is being cautious and will not make any decision until it is clear OPEC is taking proper action.”