Markets

Oil slips as higher United States output looms despite dip in drilling

Oil slips as higher United States output looms despite dip in drilling

Despite the drop in the rig count, which is often used an as early indicator of future production, activity remains much higher than a year ago when just 617 rigs were active.

Both WTI and Brent as recently as Thursday had marked their lowest settlements since mid-February.

USA crude oil production C-OUT-T-EIA soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia.

"The big take away is the implied annual rate of change", James Williams, energy economist at WTRG Economics, told MarketWatch.

April WTI oil lost 68 cents, or 1.1%, to settle at USD61.36/bbl.

Gene McGillian, director of market research at Tradition Energy, pointed out that "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 US production, and North American production levels in general, is going to negate a lot of the impact of that".




Oil prices fell on Monday as investors grappled with ongoing concerns over rising U.S. output and tight Opec supply, while last week's data showing speculators cut bets on oil suggested more selling could be seen.

USA production is expected to rise above 11 million bpd by late 2018, taking the top spot from Russian Federation, according to the International Energy Agency (IEA).

"From a fundamental standpoint, that is a material concern as the USA oil industry alone could push the global market back into a surplus, which was the reason behind the 2014-2015 bear market in oil", he said in a daily newsletter.

Energy services firm Baker Hughes said on Friday that energy companies last week cut oil rigs for the first time in nearly two months.

"Oil prices moved lower. after (the) Energy Information Administration published a report that crude production from seven major US shale plays is expected to see a climb", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. It was the first such decline in seven weeks. "Rising production and inventory in the United States has been reducing fund sentiment since it peaked at the end of January", ING said in a note. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices.


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