Published: Tue, March 13, 2018
People | By Leon Thompson

Oil Slips As Higher US Output Looms Despite Dip In Drilling

Oil Slips As Higher US Output Looms Despite Dip In Drilling

WTI settled down 68 cents to $61.36 per barrel while Brent fell 50 cents to $64.99 per barrel.

William O'Loughlin, an investment analyst at Rivkin Securities is of the opinion that "a falling rig count and the strong employment data may have helped support prices".

Brent Sweet Crude was at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.

"Rising production and inventory in the United States has been reducing fund sentiment since it peaked at the end of January", ING said in a note. After the USA boosted rigs drilling for oil for six straight weeks, American explorers idled four rigs last week, easing fears over surging shale production.

Oil prices settled with a loss on Monday (, giving back part of the sharp gains seen in the previous session as recent data showed a rise in weekly USA output, as well as expectations for a further increase in domestic production next month.

Signs of strength in the USA economy and data showing American explorers curtailed drilling activity is helping oil hold gains after its biggest jump in seven months.

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Energy services firm Baker Hughes said on Friday that energy companies last week cut oil rigs for the first time in nearly two months.

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

Still, the United States is now the world's no. 2 crude oil producer, ahead of top exporter Saudi Arabia. Only Russia pumps more, at almost 11 million bpd.

Investors are said to be weighing rising US output (which continues to climb even though rig counts were cut slightly last week) and supply against the possibility that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers will maintain its supply cuts this year and possibly even next.

On Sunday, Iranian oil minister Bijan Zanganeh said OPEC could agree in June to begin easing current oil production curbs in 2019, the Wall Street Journal reported.

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