This Article is From Apr 14, 2015

Oil Prices Rise on Expected US Shale Production Dip

Oil Prices Rise on Expected US Shale Production Dip

Singapore: Crude prices rose on Tuesday after the U.S. Energy Information Administration said it expected U.S. shale oil output to record its first monthly decline in over four years.

Front-month Brent crude futures were trading up 34 cents a $58.27 a barrel by 0106 GMT, while U.S. crude had risen 31 cents to $52.22.

The EIA expects U.S. shale production to fall by 45,000 barrels to 4.98 million barrels per day in May from April.

That would underscore how record crude output from the U.S. shale boom may be backtracking after global markets saw prices effectively slashed by 60 per cent since June on oversupply and lacklustre demand.

While political instability in the Middle East also helped push prices higher, analysts said that high global production and stocks were capping gains.

"Geopolitical risk in oil markets remains elevated. From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise," JP Morgan said in a note.

"Our base case is for crude stocks to decline through 2015, as U.S. production is expected to turn lower in 2Q2015. If production, however, remains unchanged through the remainder of 2015, U.S. crude stocks will likely increase to above 540 million barrels during the fall refinery maintenance period," it said.

© Thomson Reuters 2015

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