Brent jumps after Russia announces production cut

Front-month ICE Brent has gained by $1.23/bbl on the day, to $86.67/bbl at 09.00 GMT. The futures contract is on track to rise by 8% on the week.

PHOTO: Getty Images

Upward pressure:

In March, Russia will cut oil production by 500,000 b/d, or around 5% of its output, Russia's Deputy Prime Minister Alexander Novak said on Friday. This comes in response to the price caps imposed by the G7 coalition, which includes the EU and Australia, on Russian crude and refined oil products.

China's consumer price index (CPI), which reflects consumer demand, rose by 2.1% in January, up from 1.8% growth in December, according to data released by China’s National Bureau of Statistics (NBS). The rise was below expectations, indicating a long route to recovery for the Chinese economy.

Downward pressure:

Confidence in oil demand has taken a hit due to a large build in inventories over recent weeks, according to ANZ commodity strategist Daniel Hynes. He adds that there are concerns that weakness in the US market will offset strong Chinese demand.

According to the latest news release by the US Department of Labor, the number of Americans claiming unemployment benefits increased more than expected in the week ending 4 February. This raised concerns about a recession hitting the US.

Oil pipelines and other infrastructure appear to have escaped serious damage from the earthquake that devastated parts of Turkey and Syria and killed 19,000 people, according to Reuters.

By Nitin Sharma

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