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U.S.
government drilling data showed shale production next month was
set to rise to 5.19 million barrels per day (bpd), with output
from the Permian play, the largest U.S. shale region, expected
to reach a record 2.36 million bpd.
Global benchmark Brent crude futures were down 49 cents at
$54.87 a barrel at 1038 GMT. They touched $54.76 intraday, the
lowest since April 7.
U.S. West Texas Intermediate crude futures traded down 46 cents
at $52.19 a barrel. Their intraday low was $52.16, also the
weakest since April 7.
"EIA (U.S. Energy Information Administration) estimates for a
combined 124,000 barrels-per-day growth in U.S. shale production
over May have added another bearish element to the market,"
wrote analysts at JBC Energy, based in Vienna.
More barrels could be on their way to market from U.S. shale
fields as financial companies are investing billions in
production, a Reuters analysis showed.
Members of the Organization of the Petroleum Exporting Countries
are cutting oil production by 1.2 million bpd from Jan. 1 for
six months, the first reduction in eight years.
"The battle between the 'sheiks and the shale oil producers' is
far from decided ... with all attempts by OPEC to achieve a
lasting production deficit on the oil market being torpedoed by
non-OPEC producers – first and foremost the U.S.," analysts at
Commerzbank wrote.
The energy minister of OPEC member the United Arab Emirates said
on Tuesday he saw healthy oil demand growth this year and
believed inventories would fall, but that it would take more
time to rebalance the market.
He said "conformity" within OPEC and other producers was
improving and that the UAE was complying 100 percent with its
pledge to cut production.
A preliminary Reuters poll showed analysts expected U.S. crude
stocks to have fallen in the week to April 14, building on a
surprise decline the previous week. [EIA/S]
Analysts said they expected crude oil inventories to have fallen
by around 1.5 million barrels last week.
Inventory data is scheduled for release by the American
Petroleum Institute at 4:30 p.m. EDT (2030 GMT) on Tuesday,
followed by the official EIA report at 10:30 a.m. EDT (1430 GMT)
on Wednesday.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by
Dale Hudson)
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