Oil prices steadied on Tuesday, August 22, buoyed by signs that global supply may be tightening gradually and restrained by rising U.S. shale production.
Benchmark Brent crude LCOc1 was unchanged at $51.66 a barrel by 1120 GMT. U.S. light, sweet crude CLc1 was also unchanged on the day at $47.37.
“U.S. crude oil stocks have been falling consistently in recent weeks,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” he added.
U.S. commercial crude inventories have fallen by almost 13 percent from their March peaks, to 466.5 million barrels. C-STK-T-EIA
The Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back about 1.8 million barrels per day (bpd) of output between January this year and March 2018 in order to tighten supplies and prop up prices.
But oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.
U.S. crude production has broken through 9.5 million bpd, its highest since July 2015. C-OUT-T-EIA
Some analysts say U.S. oil output growth will slow as energy firms cut the number of rigs drilling for oil. RIG-OL-USA-BHI
So far, however, the increase in U.S. production has been relentless with increasing volumes from shale, particularly from the giant Permian basin in Texas and New Mexico.
“With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices,” Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.
The weekly rollout of data on U.S. inventories starts later on Tuesday, giving the market a chance to see if the recent downward trend in U.S. crude stocks is continuing.
Industry group the American Petroleum Institute will publish statistics on crude inventories and refinery operations for last week at 4:30 p.m. EDT (2030 GMT).
On Wednesday, it will be the turn of the U.S. government’s Energy Information Administration, Reuters reports.
U.S. crude inventories are expected to have fallen for an eighth straight week and drop by 3.4 million barrels, a Reuters poll shows.
