Seasonal factors help Russia over-comply with OPEC pledge

S&P Global Platts estimates Russian compliance with its production cut obligations is 112 percent.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Sept. 14, 2017 at 8:52 AM
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Sept. 14 (UPI) -- Seasonal factors and maintenance at an Arctic oil field in Russia may be contributing factors to its compliance with an OPEC-led production deal, data show.

Russia said oil production declined more than it committed to the Organization of Petroleum Exporting Countries as part of a market balancing effort. Total Russian oil production for the year is holding steady, but still represents a slight increase from the average last year.

Calculations from commodity pricing group S&P Global Platts show total Russian oil production for August was down 337,000 barrels per day from the 11.24 million barrels per day in October, the month that OPEC uses to gauge compliance. That means, by Platts' estimates, Russia is 112 percent in compliance.

A report sent to UPI from Platts found production was lower in part because oil producer Gazprom Neft stopped production at the Prirazlomnoye in the Russian Arctic for maintenance work, which should be finished next month.

"The output cut was mainly due to seasonal factors as many producers undertook wells maintenance in August," the report read.

Russia is the largest non-OPEC member contributing to an agreement aimed at pulling the five-year average for global commercial crude oil inventories back to even. OPEC economists said in their monthly market report for September that total commercial oil stocks for members of the Organization for Economic Cooperation and Development was 195 million barrels above the five-year average and 123 million barrels above the seasonal norm, thought the International Energy Agency said later it expected stocks to draw down in the coming months.

The OPEC-led effort was credited with putting a floor underneath the price for Brent crude oil at $50 per barrel. With market strains compounded by the two hurricanes that hit the southern United States, Brent crude oil is approaching a record high for the year, moving toward $56 per barrel early Thursday.

Igor Sechin, the head of Russian oil producer Rosneft, said last week the decline in the value of the U.S. dollar was having a greater market impact than the OPEC-led effort.

OPEC economists expect total production from non-member states to increase by 1 million barrels per day next year to average 58.8 million barrels per day.

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