Oil prices on Thursday are slightly up. Brent on March contracts is trading around $33.1 per barrel and WTI with March delivery is going for $32.2 per barrel.
The main reason for the growth is news from the Saudis and Russians about a possible reduction in extraction. After meeting with the Russian minister for energy, the head of Transneft, Nikolay Tokarev, announced that OPEC and Russia plan to meet in February to discuss a possible reduction in oil extraction in order to stabilise prices. It is interesting that the initiator for this suggestion to cut extraction has come from Saudi Arabia. This speaks volumes about the giant’s faltering and that the kingdom, despite its low extraction costs, is experiencing serious economic difficulties.
This news has given short-term support to oil quotes and we could well see a revival of prices to $36 per barrel.
On the whole, the likelihood of extraction being reduced by mutual agreement between the OPEC and non-OPEC countries is possible, but there won’t be a massive reduction. No one is preparing themselves for a significant drop in extraction.