Oil prices slide more after report shows U.S. crude stockpiles fell less than expected
Oil prices fell on Tuesday, then slid more in post-settlement trade after an industry group reported that U.S. crude stockpiles fell less than expected in the latest week while gasoline stockpiles grew unseasonably.
U.S. crude prices were down more than 1 percent at $52.32 a barrel in post-settlement trade after the American Petroleum Institute released its weekly data, indicating that crude stockpiles declined less than analysts had forecast.
Oil futures fell during the trading session, touching their lowest in 11 days as the U.S. government reported that shale oil output in May was expected to post the biggest monthly increase in more than two years.
The oil market has been caught in a tug-of-war, with OPEC production cuts supporting prices while signs of rising U.S. production have pressured crude on concerns about a glut. On Tuesday, U.S. West Texas Intermediate crude touched a low of $52.10 before bouncing on suggestions that Saudi Arabia is holding crude off the market.
“We’re right at the battle ground: the bulls and the bears are facing off against each other, trying to make their last stand,” said John Kilduff, Partner at Again Capital in New York.
Global benchmark Brent crude futures swooned as low as $54.61, the lowest since April 7, then settled down 47 cents at $54.89 a barrel.
U.S. WTI futures settled at $52.41 a barrel, down 24 cents. U.S. crude’s intraday low was also the weakest since April 7.
At a time when OPEC and other producing nations have been trying to cut output, government drilling data showed U.S. shale production next month was set to rise to 5.19 million barrels per day (bpd). Output from the Permian play, the country’s largest shale region, was expected to reach a record 2.36 million bpd.
Members of the Organization of the Petroleum Exporting Countries are cutting oil production 1.2 million bpd from Jan. 1 for six months, the first reduction in eight years.
“The battle between the ‘sheiks and the shale oil producers’ is far from decided … with all attempts by OPEC to achieve a lasting production deficit on the oil market being torpedoed by non-OPEC producers – first and foremost the U.S.,” analysts at Commerzbank wrote.