Oil prices fall, hit 11-day low on surging US shale output

Oil prices fall after EIA report on next month’s expected US shale output

Oil prices fell in trading on Tuesday, then slid more in post-settlement after the American Petroleum Institute reported US crude stockpiles fell less than expected last week and gasoline inventories grew unseasonably.

US WTI crude prices were down to $52.32/barrel in post-settlement trade following the release of the API weekly data.

Oil futures fell as well, dropping to their lowest point in 11 days.  U.S. WTI futures settled at $52.41/barrel, down 24 cents. U.S. crude’s intraday low was also the weakest since April 7.

 

“We’re right at the battle ground: the bulls and the bears are facing off against each other, trying to make their last stand,” John Kilduff, Partner at Again Capital in New York told Reuters.

Brent crude futures fell as low as $54.61/barrel, the lowest Brent has been since April 7, then settled at $54.89/ barrel.

Despite faltering commodity prices, the output from US shale fields is expected to grow as financial companies are investing billions in production.

With OPEC hinting at continuing its output cuts to the end of the year and US shale production on the increase, the future of the oil market remains uncertain.

“The battle between the ‘sheiks and the shale oil producers’ is far from decided … with all attempts by OPEC to achieve a lasting production deficit on the oil market being torpedoed by non-OPEC producers – first and foremost the U.S.,” analysts at Commerzbank wrote.

According to Reuters, the energy minister of the United Arab Emirates said he sees healthy oil demand growth and a fall in crude stocks in 2017, but with the surge in non-member production, it could take longer to rebalance the market.

He added the UAE was complying 100 per cent with its production cut pledge, adding other countries in the OPEC supply cut deal were also increasing their “conformity”.

According to data released on Tuesday, Saudi Arabia tightened its crude exports in February to the lowest since mid-2015.

Also, a preliminary poll released by Reuters showed analysts expect today and tomorrow’s US crude stock data to show a reduction in inventories in the week ending April 14.

Analysts are expecting data to show crude inventories fell by about 1.5 million barrels last week.