Oil down 1pc on continued concerns over USA output

Oil down 1pc on continued concerns over USA output

"Permian and Bakken shale basins still saw active oil rigs rising by 2 and 3 last week, respectively, and are likely to keep U.S. oil production on increasing trend", ING said.

Oil prices were down on Tuesday morning in Asia amid continued concerns over rising USA output and tight supply from the Organization of the Petroleum Exporting Countries (OPEC).

Reuters reports that U.S. West Texas Intermediate (WTI) crude futures were sold at $61.18 a barrel at 0747 GMT, down 18 cents, or 0.3 percent, from their previous close.

The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month.

Brent crude, the benchmark for more than half the world's oil, traded at US$65.07 a barrel at 10:11 a.m.in London on Monday, compared with about US$45 in June.

Both WTI and Brent as recently as Thursday had marked their lowest settlements since mid-February.

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The EIA is due to publish its latest weekly US production data on Wednesday. In addition, United States production reached 10 million barrels per day for the first time since 1970.

USA production is also expected to rise above 11 million bpd by late 2018, taking the top spot from Russian Federation, according to the International Energy Agency (EIA).

However, if predictions from Warren Patterson, a commodities strategist at ING Groep NV, prove accurate, Iran has nothing to worry about: because US activity is angering OPEC allies to the degree they will soon abandon the cartel's production cutback deal, pump all out, and drive prices back down again.

Healthy demand and ongoing supply restraint by a group or producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation, however, are preventing further price falls.

ING's Patterson agrees that keeping a lid on price hikes is necessary; in an interview in Singapore he said, "We need to see prices in the short-term trade below $60 to reduce that incentive for USA producers". Investors' bullish wagers on oil fell last week for the first time in three weeks.

April natural gas bucked the downtrend among its energy peers, settling up 1.7% at $2.778 per million British thermal units, with forecasts for more cold weather in the eastern USA boosting expectations for heating demand.

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