Oil prices slipped on Tuesday ahead of the release of US crude inventories data, as the market considers the implications of higher crude output from the country, following last week's decision by OPEC and non-member nations to extend output cuts.
International benchmark Brent crude was down 0.2 percent at $62.35 per barrel, while US West Texas Intermediate (WTI) crude futures dipped 0.35 percent to $57.26 a barrel.
US energy companies added two oil rigs in the week to Dec. 1, bringing the total count up to 749, according to data from Baker Hughes.
Crude production in the country hit a new record of 9.68 million barrels per day in the week ending Nov. 24, as per figures from the Energy Information Administration (EIA).
Official government data on US inventories is due on Wednesday at 10.30 am EDT.
OPEC and a group of non-member oil producers agreed last week to extend a pact to cut supply by 1.8 million barrels a day (bpd) until the end of 2018, to ease oversupply and bolster prices.
Saudi energy minister Khalid Al-Falih this week reiterated that the producer group was not planning to “open the taps and flood the market,” adding that oil inventories were likely to increase over the next four months.
OPEC’s compliance to supply cuts has been high, with a Reuters survey indicating that the cartel’s output fell by 300,000 barrels per day (bpd) in November, its lowest level since May
Looking ahead, the extension of the group’s output cuts should support prices in the very near team, JPMorgan Chase said in a note yesterday.
“Overall the shift to include Libya and Nigeria and six observing countries along with the talk of being increasingly agile next year should be supportive of prices in the very near term. However, any support to prices could be short lived given the stock of long positions already held by money managers, and lingering concerns about US shale’s revival plus OPEC’s eventual exit strategy,” the investment bank said.
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