The US Energy Information Administration "estimates for a combined 124,000 barrels-per-day growth in US shale production over May have added another bearish element to the market", Reuters quoted analysts at JBC Energy, based in Vienna, as saying. Oil is now trading at $51.21 in a light trading volume of 1593, near resistance 51.26, which could test its nearest resistance if prices will continue to retreat.
American Petroleum Institute (API) reported that USA markets continue to remain oversupplied though crude inventories slipped by 840,000 barrels in the week up to 14 April to 531.6 million barrels.
That could indicate fading strains from an oversupplied market, though USA crude oil production continues its build beyond 9 million barrels per day, offsetting the decline in oil inventories to some extent.
Opec agreed to slash output by 1.2 million barrels a day and non-Opec members led by Russian Federation promised to cut 558,000 barrels a day.
At the end of November, the Organization of Petroleum Exporting Countries (OPEC) agreed to cut output by 1.2 million barrels per day (mb/d) from January 1, initially for a period of six months. Production from major shale plays in May is forecast to climb to the highest level since 2015, according to the EIA.
James Williams, president of energy consultant WTRG Economics in London, Arkansas, said the minister's bullish statement did not lift prices much because of growing US shale production.
Refinery crude runs rose by 241,000 barrels per day, EIA data showed, with a sharp increase in Gulf Coast refining activity. Since bottoming at 8.428 million barrels per day in last July, the production in the United States has increased by more than 20,000 barrels per day on an average.
OPEC will meet on May 25 to consider extending the cuts beyond June. "Ahead of summer driving season, it is surprising to see a lag in demand".
Then in December, non-OPEC producers led by Russian Federation agreed to cut their own output to 558,000 barrels per day. "The reasons are twofold".
Data from the American Petroleum Institute showed on Tuesday that although crude inventories fell by 840,000 barrels in the week to April 14, they remained near record highs. US crude futures were down 5 cents at $50.39 a barrel.
Oil-market news. Oil-exporting countries are moving closer toward ending a global glut and re-balancing the market, and OPEC will decide in May whether to extend production cuts, the group's Secretary-General Mohammad Barkindo said.
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