Oil steady as Russia holds out prospect of output cut extension

Oil prices held on to gains made on the previous session on Friday, after Russian President Vladimir Putin indicated he would be prepared to extend record supply cuts in the face of the Covid-19 pandemic.

Brent crude was off 1 cent at $42.45 a barrel by 0040 GMT having risen 1.7% on Thursday, while U.S. oil was 2 cents lower at $40.62, following a 1.5% gain in the previous session. Both contracts are heading for their first weekly loss in three.

Putin said on Thursday that Russia did not see a need for major oil producers to alter a deal on cutting global supply, but did not rule out extending oil cuts if market conditions warranted.

His comments were the clearest indication so far from Russia, one of the world’s top oil producers, that it is prepared to extend unprecedented curbs on output to meet the demand slump caused by the pandemic.

Russia has allied with the Organization of the Petroleum Exporters (OPEC) led by Saudi Arabia in making the cuts to production that are due to be lifted at the end of year.

“Putin is reinforcing that Saudi/Russian unity is firmly intact and that they will continue to keep the oil prices firm,” said Edward Moya, senior market analyst at OANDA.

All the same, the spiraling numbers of new infections of Covid-19 in Europe and the U.S. is likely to keep a lid on prices, analysts say, with fresh coronavirus restrictions suggesting more pressure on fuel demand.

Several U.S. states reported record daily increases in infections on Thursday, further evidence that the pandemic is accelerating as cooler weather takes hold in many parts of the country.

France extended curfews for about two-thirds of the country’s population, while Belgium’s foreign minister was taken into intensive care with Covid-19, as the second wave of the pandemic swept across Europe.