West Texas Intermediate crude oil steadied near $59 a barrel as the International Energy Agency warned that rising U.S. supply may counter OPEC’s success in clearing a glut.
Production cuts by the Organization of Petroleum Exporting Countries and Russia have shrunk a surplus in oil inventories by about 80 percent, a report from the Paris-based IEA showed on Tuesday. Yet the decline in stockpiles will slow as climbing shale-oil output puts America on track to surpass both Saudi Arabia and Russia, the agency predicted.
“There are good reasons for the price weakness, as U.S. shale oil production is still rising rapidly,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
WTI for March delivery was 3 cents lower at $59.26 a barrel on the New York Mercantile Exchange as of 11:17 a.m. London time. The contract rose 9 cents to settle at $59.29 on Monday, snapping six days of losses. Total volume traded was about 7 percent below the 100-day average.
Brent for April settlement rose 14 cents to $62.73 a barrel on the London-based ICE Futures Europe exchange. The contract declined 20 cents to $62.59 on Monday. The global benchmark traded at a $3.62 premium to April WTI.
U.S. crude inventories probably climbed by 3 million barrels last week, according to a Bloomberg survey, while the Energy Information Administration said U.S. shale oil will rise by 110,000 barrels a day in March.
Meanwhile, OPEC expects non-OPEC producers to increase their supply by 1.4 million barrels this year. The organization maintained that the market will eventually “return to balance” by the end of the year.
Still, OPEC ministers say they aren’t worried. The market should re-balance this year, given robust demand and as the group and its allies comply with pledges to curtail supply, United Arab Emirates Energy Minister Suhail Al Mazrouei said Monday in Dubai.