Oil prices fall on relentless rise in U.S. crude output


Signs of strength in the USA economy and data showing American explorers curtailed drilling activity is helping oil hold gains after its biggest jump in seven months.

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. The Organization of Petroleum Exporting Countries and its allies pledge to curb output may be undermined as the US ships more oil to Asia, according to ING Groep NV.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.86 a barrel at 0033 GMT, up 15 cents, or 0.25 percent, from their previous close.

LONDON-Oil prices edged up Tuesday morning, even as fresh signs of rising US shale production appeared to put a cap on prices. In addition, U.S. production reached 10 million barrels per day for the first time since 1970.

Refinery crude runs rose by 85,000 barrels per day (bpd), API data showed. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices.

"The ever-expanding US supply continues to pose significant downside risk to oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago when, when just 617 rigs were active, and most analysts expect United States crude oil production, which has already risen by over a fifth since mid-2016, to 10.37 million barrels per day (bpd), to rise further.

Energy Information Administration data shows that exports have averaged about 1.5 million barrels over the past six months, nearly double the level in the previous six months, with Asia being the biggest buyer.

Zawiya exports crude from Libya's giant El Sharara oilfield, which produces 300,000 barrels per day (bpd), more than a quarter of the country's output.

On the other hand, the Iranian oil minister Bijan Zanganeh mentioned that the Organization of the Petroleum Exporting Countries or OPEC is going could come to a conclusion on their June meeting to ease the current production curbs by the year 2019.

Additionally, U.S. crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to a record 6.95 million bpd, the U.S. Energy Information (EIA) said in a monthly report on Monday.