Oil hits 11-day low on expected surge in US shale output
19 Apr 2017 - 0:02
London: Oil prices hit their lowest in 11 days yesterday on news that US shale oil output in May is expected to post the biggest monthly increase in more than two years, fuelling concerns that US production growth is undermining efforts to cut oversupply.
US government drilling data showed shale production next month was set to rise to 5.19m barrels per day (bpd), with output from the Permian play, the largest US shale region, expected to reach a record 2.36m bpd.
Global benchmark Brent crude futures were down 34 cents at $55.02 a barrel at 1330 GMT. They touched $54.76 intraday, the lowest since April 7. US West Texas Intermediate crude futures traded down 25 cents at $52.40 a barrel. Their intraday low was $52.14, also the weakest since April 7.
“EIA (US Energy Information Administration) estimates for a combined 124,000 barrels-per-day growth in US shale production over May have added another bearish element to the market,” wrote analysts at JBC Energy, based in Vienna.
More barrels could be on their way to market from US shale fields as financial companies are investing billions in production, a Reuters analysis showed.
Members of the Organisation of the Petroleum Exporting Countries are cutting oil production by 1.2 million bpd from January 1 for six months, the first reduction in eight years.
The energy minister of Opec member the United Arab Emirates said yesterday he saw healthy oil demand growth this year and believed inventories would fall, but that it would take more time to rebalance the market. He said “conformity” within Opec and other producers was improving and that the UAE was complying 100 percent with its pledge to cut production.
Saudi Arabia also continues to comply with cuts, tightening February crude oil exports to the lowest since mid-2015, official data showed yesterday.