Oil steadied near $59 a barrel in New York as the International Energy Agency warned that rising U.S. supply may counter OPEC’s success in clearing a glut.
Production cuts by the Organization of Petroleum Exporting Countries and Russia have shrunk a surplus in oil inventories by about 80 percent, a report from the Paris-based IEA showed on Tuesday. Yet the decline in stockpiles will slow as rising shale-oil output puts America on track to surpass both Saudi Arabia and Russia, the agency predicted.
“There are good reasons for the price weakness, as U.S. shale oil production is still rising rapidly,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
WTI for March delivery was 28 cents lower at $59.01 a barrel on the New York Mercantile Exchange as of 1:02 p.m. London time. The contract rose 9 cents to settle at $59.29 on Monday, snapping six days of losses. Total volume traded was about 9 percent above the 100-day average.
Brent for April settlement slipped 16 cents to $62.43 a barrel on the London-based ICE Futures Europe exchange. The contract declined 20 cents to $62.59 on Monday. The global benchmark traded at a $3.61 premium to April WTI.
U.S. crude inventories probably climbed by 3 million barrels last week, according to a Bloomberg survey, while the Energy Information Administration said U.S. shale oil output will rise by 110,000 barrels a day in March.
Oil production outside of OPEC will expand by 1.4 million barrels a day in 2018, about 250,000 a day more than the cartel projected last month, according to a report published on Monday.
Still, OPEC ministers say they aren’t worried. The market should re-balance this year, given robust demand and as the group and its allies comply with pledges to curtail supply, United Arab Emirates Energy Minister Suhail Al Mazrouei said Monday in Dubai.
Other oil-market news:
OPEC compliance with crude output cuts rose to a fresh record in January from the previous month, according to Bloomberg calculations from the group’s secondary-source estimates in a monthly market report published Monday. OPEC and non-OPEC need to keep cooperating beyond 2018, the group’s Secretary-General Mohammad Barkindo told reporters at a conference in Cairo. Profits from making gasoline fell to the lowest level since February 2017 as supplies remain elevated and production stays high despite it being refinery maintenance season.