Oil prices firmed strengthened on Tuesday, March 7, but stayed in a tight range, with investors seeking a clearer direction from inventory data and comments from oil officials as rising U.S. shale output offset OPEC production cuts.
Brent crude was up 12 cents at $56.13 a barrel as of 11:07 a.m. ET (1607 GMT). U.S. West Texas Intermediate crude rose 17 cents to $53.37. Both benchmarks have traded in negative and positive territory since the start of Asia trading.
Oil prices have been entrenched in a $3 band since February, failing to take off after OPEC implemented, to a surprisingly high degree, the first cut in production in eight years.
Iran has re-emerged as a geopolitical risk to oil markets Iran has re-emerged as a geopolitical risk to oil markets
Capping any upsurge has been an increase in U.S. shale oil drilling after WTI rose firmly above $50 a barrel in December following OPEC’s sealing of the deal, which also included several non-OPEC producers such as Russia, Reuters reports.
The International Energy Agency (IEA) forecast U.S. shale output to grow at about 1.4 million barrels per day by 2022, saying it would climb even if prices remain around $60 a barrel. A rise to $80 a barrel could precipitate shale growth of 3 million bpd by 2022, it said.
But with Russia’s lackluster participation in the cuts, rising shale output and signs that OPEC countries increased their crude exports in February after a January reduction, that bullish sentiment has wavered.
Oil company executives, energy ministers, including from Saudi Arabia and Russia, and other top officials such as the head of OPEC are meeting in Houston this week for the CERAWeek energy conference.
Russia and Iraq said it was too early to discuss that issue, but OPEC’s secretary-general as well as Saudi officials are expected to speak later on Tuesday. Russia also promised to implement its 300,000-barrels-per-day share of production cuts by the end of April.
