Oil slides as US pumps more

While data Wednesday may show USA inventories probably shrank for a second week, drillers in the nation have added rigs for the past 13 weeks.

Wednesday's EIA release will be important, especially given expectations that U.S. production will continue to increase.

"Do commodities need a bit of a prayer to rebound in 2017? We're also back into a price area that may attract more shale oil production".

Reported as rig counts, the figures from Baker Hughes show investors may be responding to improved market conditions by spending more on exploration and production.

"Rising U.S. production levels are offsetting more than a third of the six-month agreement of the 1.8 million barrel-per-day cut", McGillian said. "US producers are strong and are only going to get stronger".

Meanwhile, on NYMEX (New York Mercantile Exchange) cost of the United States light crude oil decreased $0.11 to stand at $52.30.

Crude oil futures were lower Tuesday despite expectations that United States stockpiles dropped last week.

Benchmark Brent crude futures were down 49 cents at $55.40 at 0310 GMT. The global benchmark traded at a premium of $2.26 to WTI.

The market was sluggish to usher in the week with key trading center London closing to give way for the Easter break. It is of course Opec's business to decide on its output levels, but a outcome of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws.

This is the quandary for these petrostates: cut too much and they'll be handing the market on a silver platter to upstart frackers, but cut too little and cheap crude will bleed their oil-soaked coffers dry.

A preliminary Reuters poll showed analysts expected US crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week. Investment inflows should increase in the second quarter, the bank predicted.

Citigroup's analysts had estimated in February that oil prices would rise to $70 a barrel this year as supply and demand levels continued to rebalance, CNBC reported. Tuesday's market performance was the latest example, with U.S. West Texas Intermediate crude touching a low of $52.10 before rising on suggestions that Saudi Arabia is holding crude off the market.

Despite a surge in U.S. shale production, the average cost for a barrel of Brent crude may rise by $10 by the end of the year, according to USA investment banking multinational Citigroup, as cited by Bloomberg.

  • Zachary Reyes