Oil prices retreat as data point to continued gains in United States output

Oil prices retreat as data point to continued gains in United States output

Oil prices retreat as data point to continued gains in United States output

"The rapidly growing USA shale production is making it virtually impossible for prices to rise", according to analysts at Commerzbank.

The rising concern of another supply disaster this week can lead to bigger problems such as another oil supply glut might hit the market.

The United States Shale Oil productionis adding to the oversupply worries for countries like Nigeria where crude oil accounts for over 70 percent of government revenue and a chunk of GDP. OPEC's supply cut agreement is also increasingly in doubt as time goes on. "They continue to give market share away to the U.S".

Brent crude futures were at $64.85 per barrel, down 10 cents, or 0.2%.

West Texas Intermediate for April delivery traded at $61.35 a barrel on the New York Mercantile Exchange, down 1 cent at 3:02 pm in Seoul.

Crude's rebound since a year ago is encouraging American drillers to pump even as they make efforts to be disciplined on spending, Patterson said. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices.

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The oil prices are looking to continue their slump this week as the growing output numbers continue to drive investors wary. In February, even Saudi Arabia's state oil company considered participating in these flows via a USA unit, before determining it wasn't economically viable at the time.

Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago when, when just 617 rigs were active, and most analysts expect U.S. crude oil production, which has already risen by over a fifth since mid-2016, to 10.37 million barrels per day (bpd), to rise further.

Energy Information Administration data shows that exports have averaged about 1.5 million barrels over the past six months, nearly double the level in the previous six months, with Asia being the biggest buyer.

But the analyst seems to think this might be a fait accompli, because the OPEC deal is giving "market share to the U.S." via a surge in exports to the coveted Asian market, the traditional bastion of Middle East producers - and that this will encourage some nations to retaliate by boosting supply.

A pump jack used to help lift crude oil from a well in South Texas' Eagle Ford Shale formation stands idle in Dewitt County, Texas, U.S., January 13, 2016.

Asia is "a market that the Middle East does not really want to give up", ING's Patterson said.

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