(Bloomberg) -- Oil slid in New York amid concern that global demand might not absorb swelling U.S. supplies.
Futures fell as much as 1.8 percent to a session low of $60.27 a barrel, after fluctuating in morning trading. 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.
“The EIA report yesterday about the expected increase in shale output next month certainly weighed on things,” John Kilduff, founding partner at Again Capital, said in a phone interview.“And apparent discourse among OPEC producers, specifically the Iranians, is showing that the patience is running out with the accord, partly because of what the shale players are doing in terms of grabbing more market share.”
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, 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.
West Texas Intermediate for April delivery traded at $60.46 a barrel on the New York Mercantile Exchange, 90 cents lower, at 11:14 a.m.
Brent for May settlement was down 70 cents at $64.26 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $3.80 premium to May WTI.
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.
Oil-market news:
- President Donald Trump, ousting Secretary of State Rex Tillerson, said he had disagreed with the chief U.S. diplomat over a nuclear accord with Iran.
- 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.
