“This appears to be raising doubts on the market that Russia will in fact cut its production from January as agreed with OPEC,” analysts at Commerzbank said in a note. “It is at least likely to take some months until Russia has fully implemented the agreed cuts.”
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OPEC and its partners previously reached an agreement to curb crude output by 1.2 million barrels per day starting in January. While the announcement in early December helped trigger a rally, the production cuts failed to maintain the rebound in oil prices, with investors concerned over the volume of the global oil glut.
“Ultimately, it’s going to take a lot longer for that surplus to be worked off in the event that we do get a cut in the new year,” Michael Hewson, chief market analyst at brokerage CMC Markets, told the WSJ.
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