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Russia’s Eyes $50 Oil This Year, but Won’t Attend June OPEC Meeting

Russian Oil Rigs

Russian Energy Minister Alexander Novak said today that it is unlikely that Russia will participate in the OPEC summit scheduled to be held on 2 June in Vienna, but meanwhile is predicting that oil prices could reach $50 per barrel this year.

Novak said that Russia had not been extended an invitation by OPEC for the June meeting, but that a Russian delegation would meet separately with OPEC members and maintain contact with the new Saudi energy minister.

On Thursday, the Russian energy minister said the global oil market could only balance out in the first half of 2017, while the average price over the course of 2016 could range between $40 and $50 a barrel.

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"I believe that this year between $40 and $50 is possible, by the end of the year it could reach $50," the Russian official told reporters.

A further rise in oil prices is not anticipated due to the global surplus, which stands at 1.5 million barrels per day, leaving the market without the possibility of balancing out before the first half of next year, Novak said.

"(The outlook that the market won't balance until the first half of 2017) is an optimistic forecast as oversupply persists and the decline in production volumes is slower than analysts expected," he said.

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The minister also said said he expected Russia to produce 540 million tons (10.81 million bpd) or more of oil this year, up from 534 million tons in 2015.

In a separate intervention, Novak’s deputy, Aleksei Teksler, forecasted that oil prices will reach $45 per barrel in the second half of 2016 and recover to $65 per barrel by 2018. A month ago, Novak mentioned $65 as being the average oil barrel price he envisioned for 2017.

The Russian minister also dismissed an exaggerated estimation of the OPEC countries significantly increasing oil production since, according to Russia’s evaluations, this growth only totals 100,000 barrels a day.

In April, OPEC countries increased oil production 188,000 per day (or by 1.5 percent.) to 33.217 million barrels per day.

By James Burgess of Oilprice.com

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