Russia plans to increase production oil prices are falling

The WTI index fell 0.3 per cent after rising more than 3 per cent the day before on the news that Russia plans to ease production cuts at the end of June. Oil prices came under pressure, keeping WTI below $35 a barrel.

But other people familiar with the matter say Russia is actually considering extending its current oil cuts.

Russia will meet OPEC members in June to discuss future measures. Russia's energy minister says he expects the oil market to rebalance by July. This suggests that Russia may indeed be ready to ease production cuts, currently capped at 8.5m b/d. It is worth noting, however, that there is still so much uncertainty about the recovery in demand that an extension of production cuts is sure to be on the agenda.

According to the report, Russia has complied with its pledge to cut output. In the first three weeks of may, Russian crude oil output averaged 8.72 million barrels a day, which is close to the 8.5 million b/d quota.

In another positive sign for the oil market, Nigeria and Algeria have raised their official oil prices, indicating that they expect demand to improve soon.

Meanwhile, demand is recovering in two key markets, China and India. India's energy minister says oil demand will rebound to pre-crisis levels next month. China's oil demand is expected to reach a pre-crisis level of 92 percent, IHSMarkit said.

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