Brent crude slides on IEA warning

A fracking boom in America has fuelled a surge up the global productivity rankings putting it within sight of Russia

A fracking boom in America has fuelled a surge up the global productivity rankings putting it within sight of Russia

The dip in price follows a warning from the IEA in its Oil Market Report published on Tuesday that "in 2018, fast rising production in non-OPEC (organisations of petroleum exporting countries), led by the USA, is likely to grow by more than demand".

Novak had said on Tuesday oil inventories had been declining despite the rise in us production.

"A driving force behind the next few weeks of pricing vulnerability stems from the current peak in US refinery maintenance season", Michael Tran, commodity strategist at RBC Capital Markets, wrote in a research note.

West Texas Intermediate crude oil steadied near $59 a barrel as the International Energy Agency warned that rising US supply may counter OPEC's success in clearing a glut.

US West Texas Intermediate (WTI) crude futures were at $59.17 a barrel at 0123 GMT (6:53 am in India), down 2 cents from their last settlement. "In just three months to November, crude output increased by a colossal 846,000 b/d, and will soon overtake that of Saudi Arabia". Though global inventories are now close to their five-year average thanks to OPEC's production cutbacks, the increased production in the United States is threatening to send inventories higher.

And environmentalists argue that the process - known as fracking, or hydraulic fracturing technology - may contaminate ground water and even cause small earthquakes.

Meanwhile, in the US, crude stockpiles probably climbed by 3 MMbbl last week, according to a Bloomberg survey.

US To Over Take Saudi Arabia, Russia For Top Oil Producer In 2019

Most forecasters assume the rapid rise in USA production will continue for the foreseeable future. "The tempering physical oil backdrop is. playing a central role in the recent price softness", it said. The price has recovered somewhat and Brent was trading at $62 per barrel on Tuesday.The price might have looked a little frothy given that Brent flirted with $70 per barrel last month.

"While we continue to see a firming fundamental backdrop over the course of this year.investors should not discount the caution signs that have been emerging", investment bank RBC Capital Markets said in a note to clients.

Production is increasing against a backdrop of broader market uncertainty.

Analysts at Credit Suisse have an even more aggressive prediction.

The apparent buoyancy of the global economy was also a factor to watch. Yet the decline in stockpiles will slow as climbing shale-oil output puts America on track to surpass both Saudi Arabia and Russian Federation, the agency predicted.

A second wave of US shale oil production, now a major exporter, means trade patterns are shifting to, not from, the Middle East, the IEA said.