Oil Slips As Higher US Output Looms Despite Dip In Drilling

Oil Slips As Higher US Output Looms Despite Dip In Drilling

The rising concern of another supply disaster this week can lead to bigger problems such as another oil supply glut might hit the market.

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 US crude production, according to Giovanni Staunovo, an analyst at UBS Wealth Management.

The Organization of the Petroleum Exporting Countries is breaking into two camps after more than a year of unity, The Wall Street Journal reported Monday (http://www.marketwatch.com/story/opec-unity-is-spliting-over-differing-views-on-oil-prices-2018-03-12).

May WTI Crude Oil settled at $61.33, down $0.59 or -0.95% and June Brent Crude Oil finished the session at $64.79, down $0.48 or -0.74%.

US West Texas Intermediate (WTI) crude futures were at $62.22 a barrel up 18 cents, or 0.3 per cent while Brent crude futures were at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.

Crude's rebound since a year ago is encouraging American drillers to pump even as they make efforts to be disciplined on spending, Patterson said.

More news: Was Rex Tillerson Really Blindsided by Trump Firing?

The news is expected to be light on Monday so most traders expect the price action to be driven by the U.S. Dollar and appetite for risk.

The oil prices are looking to continue their slump this week as the growing output numbers continue to drive investors wary.

"The rapidly growing USA shale production is making it virtually impossible for prices to rise", according to analysts at Commerzbank.

On the production front and according to Baker Hughes, the United States rig count - an early indicator of future crude oil production - fell 4 to 796 in the week to last Friday, the first fall in seven weeks.

Energy Information Administration data shows that exports have averaged about 1.5 million barrels over the past six months, nearly double the level in the previous six months, with Asia being the biggest buyer. Some is related to position-squaring ahead of today's US consumer inflation report, which could also impact the dollar and future demand for crude oil.

Crude production from seven major USA shale plays is expected to see a climb of 131,000 barrels a day in April to 6.954 million barrels a day, according to a monthly report from the Energy Information Administration released Monday (http://www.marketwatch.com/story/us-shale-oil-output-forecast-to-climb-by-131000-barrels-a-day-in-april-eia-2018-03-12). "We think compliance is likely to slip".

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