Oil prices stabilize at $55 per barrel in end of January

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AK&M 08 February 2021 22:44

By the end of January oil prices had stabilized at around $55 per barrel of Brent crude. The growth was suspended as a stronger US dollar and a higher number of new COVID-19 cases in China stimulated the selloff in the oil market, according to the recent issue of AK&M Information Agency's "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Oil and gas production, oil refining" monthly paper (No. 1393) dated October 7, 2020.

The decline was quite moderate, indicating a generally optimistic sentiment of the market participants. The correction is likely to continue, but mostly at a moderate pace. Such factors as a steady decline in commercial oil reserves in the US, an increase in energy imports by China and the producing countries' activity as regards the OPEC+ deal may drive up prices again.

A total of 512 million tonnes of oil were produced in 2020, which is 8.7% below the 2019 level. In December 2020, Russia produced 42.2 million tonnes of oil with gas condensate, which is 3.2% above the December 2019 result. Looking at companies, majors were unable to ramp up oil production in 2020, according to their consolidated financial statements. NOVATEK saw the weakest decline (-0.5%), while Tatneft's production dropped the most (-12.7%). For 30 days of January 2021, according to preliminary estimates, the average daily oil with condensate production in Russia increased by 1% against December to1.386 million tonnes.

In 2020, gas production in Russia amounted to 599 billion cubic meters (bcm) decreasing by 7% year-on-year. Russia produced 58.4 bcm of gas in December alone (+5.7% month-on-month, -1% year-on-year) and 8.5 bcm of associated petroleum gas. Besides, production of liquefied natural gas (LNG) in Russia amounted to 30.5 million tonnes in 2020, which is 3.5% above the previous year's result.

In January-November 2020, Russia's revenues from oil exports decreased by 40.9% year-on-year to $66.392 billion, according to information from the Federal Customs Service. Oil exports for 11 months decreased by 11% to 220.24 million tonnes. In November, oil exports from Russia increased by 3.5% against the previous month to 19.2 million tonnes, while export revenues increased by 9.5% to $5.827 billion. According to preliminary estimates by the Central Dispatching Department of Fuel Energy Complex (CDU TEK), oil exports from Russia in 2020 amounted to 232.5 million tonnes, which is 12.7% below the 2019 level.

Russia's revenues from natural pipeline gas exports in January-November 2020 dropped by 41.8% year-on-year to $22.009 billion. Physical gas exports for 11 months of 2020 decreased by 10.5% to 178.4 bcm. Gas exports in November alone increased by 2.3% to 18.3 bcm, while revenues from gas exports went up 9.3% to $2.845 billion. In January-November, Russia increased exports of liquefied natural gas (LNG) by 5.5% year-on-year to 65.2 bcm. Russia's revenues from LNG exports for the 11-month period decreased by 15.3% year-on-year to $6.481 billion. According to preliminary estimates, Gazprom delivered 179.3 bcm of gas to the non-CIS countries in 2020; exports of gas via pipelines from Russia decreased by 10.9% versus 2019.

An in-depth segment review is provided in issue 1408 of the "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Oil and gas production, oil refining" monthly paper dated February 3, 2021.