Oil prices steadied on Wednesday after climbing about 3 percent in the previous session, with worries about the global economy and forecasts of swelling U.S. production dampening sentiment.
Brent crude oil futures LCOc1 were at $60.67 per barrel at 1445 GMT, up 3 cents or 0.05 percent.
West Texas Intermediate crude futures CLc1 were down 15 cents, or 0.29 percent, at $51.96 a barrel.
U.S. crude output is expected to rise to a new record of more than 12 million barrels per day this year, the Energy Information Administration (EIA) said on Tuesday, adding that the U.S. will become a net crude exporter in late 2020.
The forecast could undermine oil markets which have been receiving support from supply cuts by the Organization of the Petroleum Exporting Countries, including top exporter Saudi Arabia, and major non-OPEC producer Russia.
“U.S. oil production will continue to grow strongly this year and next year,” Carsten Fritsch, senior commodities analyst at Commerzbank, told Reuters Global Oil Forum.
“That means OPEC won’t have any other choice than extending the production cuts beyond mid-year. Even deeper cuts could be necessary”, Fritsch added.
Mounting signs of an economic slowdown across the world, especially in China, may also keep oil prices in check.
White House estimates showed on Tuesday that the U.S. economy is taking a larger-than-expected hit from a partial government shutdown.
The outlook for the global economy darkened further after Britain’s parliament on Tuesday shot down Prime Minister Theresa May’s deal to leave the European Union.
Earlier this week, China reported poor December trade data, with exports and imports contracting from a year earlier.
Markets on Tuesday took the announcement as evidence that authorities are shifting to a policy of easing to counter a slowdown in the world’s second-biggest economy, as China’s National Development and Reform Commission signaled it might roll out more fiscal stimulus.
China’s central bank on Wednesday made its biggest daily net cash injection via reverse repo operations on record, in efforts oil markets will watch closely.
“(China’s) rapidly expanding economy and … thirst for oil has in recent years provided a major pillar of price support,” Stephen Brennock, analyst at London brokerage PVM Oil, said.
“This unprecedented slowdown will weigh on the global oil market and do no favors for those hoping for a sustained recovery in prices.”
