Oil prices rose early on Thursday, recouping some losses of the previous three days, after Russia said it would present a plan to compensate for exceeding its OPEC+ oil production quota in April.
Following three consecutive trading days of losses, Brent Crude prices were rising by 0.88% at $82.62 as of 9:00 a.m. EDT on Thursday, and the U.S. benchmark, WTI Crude, was trading 0.93% higher at $78.29.
Oil prices still look rangebound in the low $80s, at least until next week’s OPEC+ meeting on June 1, which is expected to decide how to proceed with the current cuts of around 2.2 million barrels per day (bpd) in the second half of the year.
Oil has been capped by concerns about demand and the fact that the Fed is still unconvinced that the fight against inflation is over, while a Russian pledge to compensate for overproduction supported prices early on Thursday.
On Wednesday, Russia’s Energy Ministry said “In April, as part of voluntary cuts, Russian oil production was slightly above target levels.”
“Overproduction was due to the technical features of reducing production by a significant amount. Russia is fully committed to the OPEC+ agreements, plans to compensate for shortfalls in production plans and will soon submit to the OPEC Secretariat its plan to cover small deviations from voluntary production levels,” the ministry added.
While lower production from Russia could support prices, the market has been fretting about oil demand this week, amid signs of weakening physical crude prices across the board.
In addition, the Fed’s minutes from its meeting early this month, released on Wednesday, showed that officials have become more concerned about inflation.
“Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate,” the Fed said.