Oil prices are under pressure after an unconfirmed report out that Russia would oppose an additional output cut but instead would stay the course on current cuts. Yet an unsourced story from Bloomberg was enough to break oil that had been on a streak of 8 up days in a row, one of the best runs in oil in seven years. What is funny about this story back in May is that Russian Energy Minister Alexander Novak said they were not ruling out a deeper cut and that contrasts with these unnamed Russian oil company sources. Early on, some Russian oil companies opposed cuts in production but changed their mind when Russian President Vladimir Putin made it clear that he was for cuts. Russia’s oil companies, of course, bowed to his wishes.
The Bloomberg report, citing unnamed Russian government officials, said that further supply cuts might send the wrong message to the market and suggest the current pact isn’t doing enough.
This comes as President Trump meets with Putin on Friday on the sidelines of the G-20 summit in Hamburg. This meeting comes against a backdrop of North Korea shooting off an intercontinental missile and the threat of more sanctions on Russia by the US Congress for interference in the US election. Many are saying that the meeting is going to be tough as Trump must strike a balance of cooperation on issues such as ISIS and North Korea that they agree on and a host of other issues like Syria and the Ukraine where they are diametrically opposed.
Talk of US sanctions are worrying US oil companies as Dow Jones reports that Exxon Mobil and other energy companies have joined President Trump in expressing concerns over a bill to toughen sanctions on Russia, arguing that it could shut down oil and gas projects around the world that involve Russian partners.
Oil rig counts fell as well as US oil production? Are producers having shale regrets? One company we know is having shale regrets. Reuters reported that BHP Billiton’s Chairman Jac Nasser said on Thursday that BHP’s $20 billion investment in U.S. shale oil and gas six years ago was, in hindsight, a mistake. Reuters writes that BHP entered the shale business at the height of the fracking boom in 2011 and invested billions more developing the operations. The fall in oil prices since then has led to pre-tax write-downs of about $13 billion on the business.
