Oil slides on speculation United States surge will undermine OPEC cuts

  • Oil slides on speculation United States surge will undermine OPEC cuts

Oil slides on speculation United States surge will undermine OPEC cuts

The U.S. government expects major shale regions to boost output by 131,000 bopd in April, spurring fears that surging supplies will undermine OPEC's efforts to clear a glut.

Healthy demand and ongoing supply restraint by a group or producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation, however, are preventing further price falls.

The split is driven by differing views over whether $70 a barrel would send USA shale companies into a production frenzy that could cause prices to crash.

Sentiment is being soured further as United States inventories are forecast to have risen for a third week.

Oil prices were down on Tuesday morning in Asia amid continued concerns over rising US output and tight supply from the Organization of the Petroleum Exporting Countries (OPEC).

While oil rebounded Friday from a three-week low as equities gained, crude has struggled to recoup losses from last month's broader market slump.

"The market continues to flip back and forth on the idea that increased global demand and a production cut is going to support prices. but USA production, and North American production levels in general, is going to negate a lot of the impact of that", said Gene McGillian, director of market research at Tradition Energy.

Hedge funds increased bets on falling West Texas Intermediate crude prices by the most this year, according to the U.S. Commodity Futures Trading Commission.

Total volume traded was about 53% below the 100-day average.

At 0640 GMT, May WTI crude oil is trading $61.86, down $0.06 or -0.10% and June Brent crude oil is at $65.35, up $0.08 or +0.12%.

That expected increase would top the 105,000 bpd climb in March from the previous month, to what was then expected to be a record high of 6.82 million bpd, the EIA said. "This would see shale oil production soar by 1.5 million bpd within a year – enough to cover the total increase in global oil demand", Commerzbank said in a note.

Wood Mackenzie Ltd. last week forecast that US crude shipments overseas will soar to nearly 4 million bpd by the mid-2020s, rivaling shipments from Iraq and Canada; and as far as Patterson is concerned, the Middle East won't give up Asia easily. Meanwhile, stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, are forecast to have been little changed after 11 straight weeks of declines.

Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.5%, at $1.89 a gallon.