Oil prices extended gains on Tuesday, as Russia plans to cut its oil production next month and Lybia's national oil company declared forced shutdown due to force majeure.
Russia's Energy Minister Alexander Novak announced on Tuesday that the country will cut its oil output by at least 50,000 to 60,000 barrels per day (bpd) in January, which signals that its production will be around 11.35 million bpd next month, slightly lower than 11.37 million bpd last month.
Yet Novak stressed that the supply reduction will be carried out gradually. "Everything will depend on technological and climate possibilities. We will get proposals from the companies," Novak told reporters.
Further lifting oil prices, Lybia's National Oil Company (NOC) declared on Monday a state of force majeure on exports from the country's biggest producer, the El Sharara oilfield as of Dec. 9, which was occupied by a militia group over the weekend.
The supply outage would lead to a production loss of 315,000 bpd, and an additional loss of 73,000 bpd at the El Feel oilfield because of its dependence on El Sharara for electricity supply, NOC said in a statement.
As Libya was exempted from a combined 1.2 million bpd output cut deal announced by the OPEC and its allies last week, analysts said the latest output reduction would help prop up investors' sentiment and ease the ongoing concerns over a supply glut.
The West Texas Intermediate for January delivery increased 0.65 U.S. dollar to settle at 51.65 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery was up 0.23 dollar to close at 60.2 dollars a barrel on the London ICE Futures Exchange.
Editor:Cherie
