Oil prices move lower after Friday's rig-powered surge

Dianna Christensen
March 14, 2018

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

As crisis-stricken Venezuela is struggling with a steep decline in its oil production, India's average oil imports from the Latin American OPEC member have slumped over the last few months to their lowest level since 2012, Reuters reported on Tuesday, quoting industry and shipping sources. West Texas Intermediate, the US benchmark for the price of oil, was down 0.6 percent to $61.67 per barrel.

"Permian and Bakken shale basins still saw active oil rigs rising by two and three last week, respectively and are likely to keep United States oil production on increasing trend", ING said.

Oil markets climbed on Monday, March 12, on the back of a drop in the number of United States rigs drilling for more production and as the USA economy continued to create jobs, which industry hopes will drive higher fuel demand, NAN reports.

"Oil prices moved lower. after (the) Energy Information Administration published a report that crude production from seven major USA shale plays is expected to see a climb", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

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Oil prices shot up more than 3 percent in Friday trading after oil and gas services company Baker Hughes reported a dip in rig activity in North America. "We have monthly reports from the International Energy Agency and OPEC in the coming days to influence prices, but for now, crude is having a downbeat start to the week, unwinding some of Friday's effervescent rally".

Both crude benchmarks dropped by around one per cent the previous session.

At 0640 GMT, May WTI crude oil is trading $61.86, down $0.06 or -0.10% and June Brent crude oil is at $65.35, up $0.08 or +0.12%. That compared with analysts' expectations for an increase of 2 million barrels.

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.

U.S. Shale 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). Gasoline futures in NY are down 0.2% at $1.8895 a gallon.

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