Oil fluctuated in New York amid concern that, while global demand is strong, it might not absorb swelling U.S. supplies.
Futures added 0.3 percent after retreating 0.4 percent earlier. The U.S. government expects major shale regions to boost output by 131,000 barrels a day in April, spurring fears that surging supplies will undermine OPEC’s efforts to clear a glut. Sentiment is being soured further by a forecast increase in U.S. inventories, a third consecutive weekly gain.
Oil has struggled to recover losses from last month’s broader market slump after topping $66 a barrel in January. While a brighter economic outlook has underpinned demand expectations following a better-than-expected U.S. jobs report, expanding American production remains a challenge to the Organization of Petroleum Exporting Countries and its allies, which are trying to prop up prices via output curbs.
“The oil market is looking increasingly oversupplied,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate for April delivery traded at $61.55 a barrel on the New York Mercantile Exchange, up 19 cents, at 10:13 a.m. London time. The contract declined 68 cents to $61.36 on Monday. Total volume traded Tuesday was about 23 percent below the 100-day average.
Brent for May settlement was up 13 cents at $65.08 a barrel on the London-based ICE Futures Europe exchange, after dropping 54 cents on Monday. The global benchmark traded at a $3.58 premium to May WTI.
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Production from shale regions will reach 6.95 million barrels a day next month, the U.S. Energy Information Administration said in its monthly drilling report. The Permian Basin is seen leading the way with an 80,000-barrel increase. Total American output has passed 10 million barrels a day, beating a record set in 1970.
U.S. crude inventories probably expanded by 1.9 million barrels in the week through March 9, according to a Bloomberg survey before EIA data on Wednesday. Meanwhile, stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, probably held steady after 11 straight weeks of declines.
Workers at Libya’s Zawiya oil-export terminal started a strike on Monday over delayed salary payments, according to people with knowledge of the matter. Gasoline futures in New York were unchanged at $1.894 a gallon on Tuesday.