Oil trades near $51 after slumping Shale comeback signs

Oil trades near $51 after slumping on signs of Shale comeback copy

 

Bloomberg

Oil traded near $51 a barrel amid speculation a production boost from U.S. shale producers will counter the first output cuts from OPEC in eight years.
Futures fell 0.2 percent in New York after falling 1.7 percent on Tuesday, the first drop in five days. The Energy Information Administration increased its U.S. oil output forecast for this year and next, and domestic explorers last week raised the number of rigs in action to the most since January. Nationwide crude inventories slid by 2.2 million barrels, the American Petroleum Institute was said to report. EIA data Wednesday are also projected to show a drop.
Oil surged to a 16-month high Monday after the Organization of Petroleum Exporting Countries agreed last week to trim the group’s output by 1.2 million barrels a day from January to stem a supply glut and buoy prices. OPEC has invited 14 producers from outside the group to a meeting on Saturday to discuss the curbs, Secretary-General Mohammad Barkindo said. “The return of OPEC does not signal a return to a raging bull market,” Seth Kleinman, head of energy strategy at
Citigroup Inc. in London, said in a report. “The game has changed. There is a new swing producer in town in the form
of U.S. shale, and the market will be watching to see how quickly and in what size they will respond.”
West Texas Intermediate for January delivery was at $50.84 a barrel on the New York Mercantile Exchange, down 9 cents, at 12:09 p.m. in London after falling as much as 1.1 percent earlier. The contract lost 86 cents to close at $50.93 on Tuesday following a 15 percent advance over the previous four sessions. Total volume traded was 5 percent above the 100-day average.
Brent for February settlement was 10 cents lower at $53.83 a barrel on the London-based ICE Futures Europe exchange. The contract lost 1.8 percent to $53.93 on Tuesday. The global benchmark crude traded at a premium of $1.90 to February WTI.
The EIA raised its domestic output forecast for 2017 to 8.78 million barrels a day from 8.73 million projected in November, according to its monthly Short-Term Energy Outlook released Tuesday. It increased its 2016 forecast to 8.86 million barrels a day from 8.84 million.
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, expanded by 4 million barrels last week, the API reported Tuesday, according to people familiar with the data. Nationwide crude inventories probably fell by 1.5 million barrels last week, according to a Bloomberg survey before an EIA report. Nigeria plans to resume output of its Forcados crude grade in January or February once repairs to a pipeline damaged during an attack are complete.
Kuwait and Saudi Arabia agreed that any resumption of crude production from shared oil fields along their border won’t raise their output beyond limits set at an OPEC meeting last week, according to two
officials familiar with the talks.
Royal Dutch Shell Plc is likely to sign a preliminary non-
binding agreement on Wed-nesday for fields in Iran, according to a person with knowledge of the matter.

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