Russia's oil output up by 2.5% in October, prices grow

Russia's oil output up by 2.5% in October, prices grow
Russia's daily oil production overtakes Saudi Arabia
By bne IntelliNews December 23, 2016

Russia's oil production gained a notable 4.7% year-on-year and 3.3% month-on-month to 47.1mn tonnes in October 2016, the state statistics agency Rosstat reported on December 22. IN daily barrel terms Russia produced 10.75 mln barrels of oil per day In October 2016 surpassing Saudi Arabia by 2.11%, according to Russian State Statistics Service (Rosstat).

Russia's oil output will amount to record-high 547.5mn tonnes in 2016 overall, increasing by 2.5% year-on-year, according to the forecasts by the Ministry of Energy cited by Prime on December 21. 

According to Rosstat, in January-October overall, oil output increased by 2.5% y/y to 455.8mn tonnes. Should October's output be matched in November and December, the forecast will be met.

The target for 2016 beats the previous ministry's estimates of 540-544mn tonnes and the forecast of the Ministry of Economic development of 538mn tonnes of oil to be extracted in 2016. Amid record-high output figures, Russia recently joined another 11 non-OPEC oil producers in striking a historic production cut deal with the cartel.

Russia's daily output in October jumped  to 10.75mn barrels from 10.28mn in September, while Saudi Arabia's previously flat daily output slipped for the second month in a row, down to 10.53mn barrels. The aggregate output of the Opec countries inched up to 33.64mn barrels, with Iraq's output at 4.56mn barrels.

Russian Minister of Energy Alexander Novak estimated global crude oil supply exceeding the demand by about 1.5-1.8mn barrels daily, expecting the 1.8mn barrels cut deal to balance the market at $50-60 per barrel oil price. 

Indeed the prices had picked up in October. According to Rosstat, in the reporting month of October the actual export price of Russian oil went up to $326.6 or by 16.3% year-to-date (keeping positive double-digit growth rate since June 2016), while Urals blend price peaked at an average of $350.4 per tonne or up by 31.8% ytd (the highest monthly advance seen sine 2014).

October's advance in prices almost closed the year-on-year gap with 2015 numbers, for the first time in 2016. In October 2015, the average export price of Russian oil and of Urals blend stood at $336 and $341 per tonne, respectively.