Oil Dips, Hits 11-Day Low As US Shale Output Seen Surging

Dr. Maan Fares cardiologist and vice department chair of Global Patient Services at Cleveland makes a point. — courtesy

Dr. Maan Fares cardiologist and vice department chair of Global Patient Services at Cleveland makes a point. — courtesy

A surge in US production is a major threat to OPEC's effort to reset the still-oversupplied global oil market.

West Texas Intermediate for May delivery was at $52.62 a barrel on the New York Mercantile Exchange, down 3 cents, at 7:50 a.m.in London.

One significant risk to an uptick in crude prices could prove to be US shale production, which is tipped to come "roaring back" in 2017, according to the bank.

USA shale production in May is likely to post the biggest monthly gain in more than two years, government data showed on Monday, as producers step up the pace of drilling with oil prices holding above $50 a barrel. The price for Brent crude oil was down 0.13 percent about a half hour before the start of trading in NY to $55.82 per barrel. They touched an intra-day low of $54.98, the weakest level in 11 days.

Some of the recent attempts at valuing Aramco have placed the company's total worth at somewhere between US$400 billion and US$1 trillion, according to various assumptions about the tax rate, the cost of capital, ability to generate cash flow, oil price projections, and potential political sensitivity for future investors.

"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 US", analysts at Commerzbank wrote.

OPEC and some non-OPEC producers agreed to cut output on November 30, 2016 by 1.2 million barrels in the first six months of 2017.

Saudi refineries increased the amount of crude they processed in the month by 26 per cent to 2.67 million barrels a day, the highest in JODI data going back to January 2002.

On the other hand, the United Arab Emirates will reduce output by 139,000 barrels a day, Kuwait by 131,000 barrels a day and non-OPEC member Russian Federation will cut by as much as 300,000 barrels per day.

Crude oil fell on Monday in quiet trading after the three-day Easter break on signs the United States is continuing to add output, undermining OPEC efforts to support prices, and as the market digested North Korea's failed missile launch on Sunday.

A preliminary Reuters poll showed analysts expected U.S. crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week. Off-topic, inappropriate or insulting comments will be removed.