Oil futures are tumbling on Tuesday as traders expect a surge in US shale production. As Organization of the Petroleum Exporting Countries (OPEC) members attempt to reduce the oversupply in the international market, US output is undermining those efforts as companies try to take advantage of higher crude prices.
May West Texas Intermediate (WTI) crude futures dipped $0.35, or 0.66%, to $52.30 per barrel at 16:28 GMT on Tuesday on the New York Mercantile Exchange. US crude prices are now trading at 11-day lows.
Brent, the international benchmark for oil prices, is also falling on Tuesday. June Brent crude lowered $0.57, or 1.03%, to $54.79 a barrel on London’s ICE Futures exchange. Brent crude is trading at its lowest level since April 7.
Traders expect US shale oil output to record its biggest monthly jump in May in more than two years, according to a new report from the Energy Information Administration (EIA). US government drilling data highlighted that shale production is expected to increase to 5.19 million barrels per day (bpd) next month.
Prior to the Easter holiday, Baker Hughes data found that the US oil rig count jumped for the 13th consecutive week. The total number of oil rigs now stands at 683, the highest in two years.
US oil firms are looking to take advantage of $50 crude. This is causing great concern among investors because it offsets the cuts made by OPEC nations this year.
Not everyone is worried, though. The United Arab Emirates (UAE) noted that oil demand growth will remain healthy this year and inventories will slip. The UAE did warn that it will take time for the oil market to rebalance. Officials in the UAE as well as in Saudi Arabia are urging fellow OPEC members to work together. An official OPEC meeting will be held next month in Vienna, where it is expected the oil cartel will agree to extend its
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