Russian domestic oil prices for January delivery eased further on Friday due to a decline in global prices and a domestic oil glut, falling to $7-$9 per barrel for the first time since early 2003, traders said. Oil producers were prepared to sell crude at 1,800 roubles ($62) per tonne or $8.47 per barrel at West Siberian metering points, down from 2,200-2,500 roubles per tonne at the start of the week and 3,000-3,300 roubles last month.
Prices for Russia's main crude oil export blend Urals fell close to $30 per barrel this week, the lowest level since 2004, making exports loss-making due to high export duties. Oil firms tend to re-route volumes to domestic refineries when oil prices fall and now face a glut of domestic supplies.
The Ufa group of refineries was prepared to pay only 1,500 roubles per tonne ($52) or $7.1 per barrel at West Siberian metering points. Up to 3 million tonnes of crude is sold during the sessions every month by small producers and major firms that lack refining capacity, and is bought by independent refiners.
Ufa will continue buying crude next week, while the Moscow refinery has enough crude to meet its January needs after buying volumes at 2,500-3,000 roubles per tonnes at the refinery gate earlier this week, traders said. Russian domestic oil prices are below production costs and taxes for a third month in a row. Small companies, which account for about 5 percent of Russia's total oil production, have been worst affected because of a lack of long-term funding, retail outlets and refining capacity.