Oil above $58 on U.S. shale output report, Mideast

By Reuters

Apr 14, 2015 08:08 AM EDT

Crude oil rose on Tuesday after a forecast that U.S. shale oil output would record its first monthly decline in more than four years and on tension in Yemen, where top oil exporter Saudi Arabia is embroiled in a civil war.

Brent crude LCOc1 was up 30 cents at $58.23 a barrel by 1000 GMT, while U.S. crudeCLc1 was up 40 cents at $52.31.

The U.S. Energy Information Administration (EIA) said on Monday it expected U.S. shale production to fall by 45,000 barrels per day (bpd) to 4.98 million bpd in May.

Shale production has helped boost U.S. oil output by more than 4 million bpd since 2010 and has been a key factor behind the collapse in world oil prices over the last year.

But a collapse in oil prices from above $115 a barrel last June, have now begun to hit exploration.

"It's a small change, just a drop in the ocean, but an excuse to buy," said Carsten Fritsch, analyst at Commerzbank.

"A lot of speculative financial investors think oil is cheap and are looking for a reason to get into the market."

Oil also found support from tension in the Middle East, where fighting is continuing in Syria, Iraq and Yemen.

Yemen's liquefied natural gas plant said on Tuesday it declared force majeure due to deteriorating security, halting production.

Yemen is a small oil producer, pumping only around 130,000 bpd of crude in recent months, but analysts fear its civil war could destabilize its northern neighbor, Saudi Arabia.

"Geopolitical risk in oil markets remains elevated," JP Morgan analysts said in a note. "From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise."

In Asia, China exported 750,000 tonnes of crude oil in March, its largest volume since 2006, in a possible sign the world's second largest crude importer is running out of storage capacity.

Analysts also said that China's demand growth would likely slow further.

"With China's Q1 GDP figures about to be released tomorrow, we see very little upside even if prices move up today," Singapore-based brokerage Phillip Futures said.

China's economy is growing at its slowest pace in 25 years and its export sales contracted 15 percent in March, deepening concern over Chinese economic growth.

© 2023 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics