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LONDON—Oil prices edged down Tuesday after a fleeting move higher, as fresh signs of rising U.S. shale production appeared to put a cap on prices.
Brent crude, the global benchmark, was down 0.3% at $64.76 a barrel on London’s
On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.2% at $61.26 a barrel.
U.S. tight oil production, or shale fracking, should rise by 131,000 barrels a day in April, to a record of 6.95 million barrels a day, according to the U.S. Energy Information Administration’s latest drilling report released this week.
“The rapidly growing U.S. shale production is making it virtually impossible for prices to rise,” according to analysts at
The EIA last week also raised its production estimate for the full year, saying it expects total U.S. crude production to rise by 1.4 million barrels a day in 2018. Total output should now average 10.7 million barrels a day this year, up from a previous forecast of 10.6 million barrels a day.
Meanwhile, the International Energy Agency said last week it expects the U.S. to overtake Russia as the world’s largest oil producer by 2023, with output rising to 12.1 million barrels a day.
“The oil market is looking increasingly oversupplied,” said
an analyst at brokerage PVM Oil Associates Ltd., in a note Tuesday. “It appears that money managers are getting rid of their long positions and this is why the front-end spreads of the two main crude oil futures contracts have been drifting lower lately.”
New indications of growing U.S. output come as the Organization of the Petroleum Exporting Countries—which has been holding back output by 1.8 million barrels a day since the start of last year—is divided over how high the price of oil should be. Saudi Arabia, the de facto leader of the oil cartel, would like prices at $70 a barrel or higher, while Iran would like them closer to $60 a barrel.
The split is driven by differing views over whether $70 a barrel would send U.S. shale companies into a production frenzy that could cause prices to crash.
Oil market participants are looking ahead to monthly reports from OPEC and the IEA this week to see whether the agencies increase their forecasts for U.S. crude production, according to
an analyst at UBS Wealth Management.
Among refined products, Nymex reformulated gasoline blendstock—the benchmark gasoline contract—was down 0.5%, at $1.89 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $571.75 a metric ton, up 0.6% from the previous settlement.
Write to Christopher Alessi at firstname.lastname@example.org