“Due to recent technical advancements in USA shale production, the break-even point has been greatly lowered on a decline in production costs”, the report said. Analysts said trading would likely be light Monday owing to the Independence Day holiday in the United States.
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The oil price outlook is unlikely to change significantly in 2017 as supply from new oilfields, including the super-giant Kashagan in Kazakhstan and others in the U.S. Gulf of Mexico, offset production drops elsewhere, Taylor said.
Brent crude lost 4.3% and then steadied at just over $47 a barrel, while West Texas Intermediate was flat at $46.61, having slid 5% overnight.
“Lower-than-expected gasoline demand in the U.S., despite the summer driving season, is also adding downward pressure on oil prices”.
Brent crude dropped $1.04 to $49.05 per barrel early Tuesday morning. The global benchmark crude traded at a 65-cent premium to WTI for the same month. It fell as low as $47.17 and rose as high as $48.26 in intraday trading.
But OPEC’s oil output in June was its highest in recent history, as Nigeria’s oil industry partially recovered from militant attacks and Iran and Gulf members boost supplies.
“Oil market developments require some attention, above all the question of whether the view that crude markets should be largely in balance by the end of 2016 ignores some unseasonal build-ups in oil products (exacerbated by China turning a net exporter of product in recent years), and a surprising and counter-seasonal trend fall in USA gasoline consumption”, writes Marc Ostwald, a strategist at ADM Investor Services International.
“Oil once again is testing key support levels and the inventory report will be the next focus, especially the level of gasoline inventories”, Ole Hansen, commodity strategist at Saxo Bank in Copenhagen, said. Contracts for delivery further out fell less than August futures, shrinking contango, the structure where prices for delivery today are lower than those in future months.
Oil demand and as a result prices could come under pressure as weak margins prompt run cuts at a time when refineries in Asia are already gearing up to enter their maintenance season.
Gasoline futures hit a 3-month low, sliding 1.5 per cent to around $1.46 a gallon.
The American Petroleum Institute (API) trade group said its data showed US crude stockpiles fell by 6.7 million barrels last week, declining for a seventh week in a row.
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Russian oil output stood at 10.84 million barrels per day (bpd) in June, up from 10.83 bpd in May, Energy Ministry data showed on Saturday.
