Oil prices hit their lowest in 11 days on Tuesday on news that US shale oil output in May is expected to post the biggest monthly increase in more than two years, fueling concerns that US production growth is undermining efforts to cut oversupply.
US 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 US 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.
US West Texas Intermediate (WTI) crude futures traded down 46 cents at $52.19 a barrel.
Their intraday low was $52.16, also the weakest since April 7.
“The (US) Energy Information Administration (EIA) estimates for a combined 124,000 bpd growth in US 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 US shale fields as financial companies are investing billions in production, a Reuters analysis showed.
Members of the Organization of the Petroleum Exporting Countries (OPEC) are cutting oil production by 1.2 million bpd from Jan. 1 for six months, the first reduction in eight years.
Suhail Al-Mazroui, the UAE’s energy minister, said on Tuesday that 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.
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