EghtesadOnline: Oil prices rose more than 1% on Tuesday after the main US energy forecasting agency predicted shale output in the world’s biggest crude producer would fall by the most on record in April, adding to cuts from other major producers.
Brent futures rose 53 cents, or 1.7%, to $32.27 a barrel after settling 0.8% higher on Monday. US West Texas Intermediate crude was up 32 cents, or 1.4%, at $22.73, having dropped 1.5% the previous session, CNBC reported.
According to Financial Tribune, the Organization of the Petroleum Exporting Countries, along with Russia and other producing countries — known as OPEC+ — agreed over Easter to cut output by 9.7 million barrels per day in May and June, equal to about 10% of global supply before the viral outbreak.
The US, the world’s biggest producer, is reducing output as well, and other countries are taking the estimated cut in production to about 19.5 million bpd.
But analysts, oil industry executives and others say no matter how the numbers are massaged, the reduction will not be enough to match a contraction of around a third of global oil demand due to the outbreak. Oil prices are still down by over 50% so far this year.
Inventories, where available, are expected to fill up fast even as some countries among the G20 agreed to buy oil for their national reserves.
Still, US production is falling in tandem with a drop in prices and there are signs the coronavirus outbreak may have peaked in some areas of the world.
US shale oil output is expected to have the biggest monthly drop on record during April, the US Energy Information Administration said Monday.
Numerous US producers, including Exxon Mobil and Chevron, have said they will cut spending and expect to produce less crude in the coming months.