Russia's Novak says storage weighing on oil prices but output pact will help

FILE PHOTO: Russian Energy Minister Alexander Novak arrives at the OPEC headquarters in Vienna, Austria December 6, 2019. REUTERS/Leonhard Foeger

MOSCOW (Reuters) - Russian Energy Minister Alexander Novak said on Tuesday oil markets would start balancing out once an output deal takes effect in May while no significant rise in prices is likely in the near future due to high levels of global storage.

The Organization of the Petroleum Exporting Countries and other large oil producers including Russia have agreed to cut output by almost 10 million barrels per day (bpd), or 10% of global oil production, in May-June.

Additional cuts are expected from countries such as the United States, Canada, Norway and Brazil.

“However, you shouldn’t wait for a significant rise in the price of a barrel in the nearest future due to high inventories,” Novak told a ministry’s inhouse magazine published on Tuesday.

Fuel demand is down 30% globally, and storage is becoming precious, with roughly 85% of worldwide onshore storage full as of last week, data from intelligence firm Kpler showed.

The oil markets have fallen for eight of the past nine weeks.

Reporting by Vladimir Soldatkin and Olesya Astakhova; editing by Jason Neely