Mubasher: Oil prices on Friday dropped as Russia suggested that it may “softly” ramp up its output after withholding crude production under the supply cut deal with the Organization of the Petroleum Exporting Countries (OPEC).

Brent crudes stood earlier in the day at $78.43 per barrel (pb), shedding 0.5% from their last session and 2.6% down from the record high of $80.50 pb, while US Nymex futures traded at $70.44 pb, 0.4% lower than their last settlement.

The falling prices come ahead of the Baker Hughes data pertaining drill count in the US due later in the day.

On Thursday, Russian energy minister Alexander Novak said that trimming restrictions on oil market supply, on which OPEC and non-OPEC producers, including his country, agreed in 2017, could be eased gradually, if the market is seen returning to balance in June.

“The Russians have always struck me as production cut tourists keen to get off the boat and crank up production as soon as inventories were stabilized and prices once again elevated,” futures brokerage AxiTrader chief market strategist Greg McKenna told Reuters.

“That possibility is top of the mind for traders and as a result oil prices are slipping,” McKenna added.

On the other hand, while Russia and OPEC benefit from higher crude prices, which hiked 20% since the end of 2017 on the back of the cut deal, the short supply has allowed other major oil producers like the US, Canada and Brazil to boost their production and gain market share.

By 9:52 am GMT, Nymex crudes plummeted 2.09% to $69.23 pb, while Brent crude futures plunged 2.39% to $76.91 pb, both falling far from multi-year high reached in early May.

Source: Mubasher

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