SINGAPORE: Oil prices dipped on Tuesday, extending losses from the previous session, as the inexorable rise in US crude output weighed on markets.
US West Texas Intermediate (WTI) crude futures were at $61.18 (Dh225) a barrel at 0747 GMT, down 18 cents, or 0.3 per cent, from their previous close.
Brent crude futures were at $64.77 per barrel, down 18 cents, or 0.3 per cent.
Both crude benchmarks dropped by around 1 per cent in their Monday sessions.
“Oil prices fell on the back of concerns that surging US production … could push inventories in the US higher,” ANZ bank said on Tuesday.
Healthy demand and ongoing supply restraint by a group or producers led by the Organisation of the Petroleum Exporting Countries (Opec) and Russia, however, are preventing further price falls.
But in a sign that an early-year rally in crude oil has fizzled out, money managers cut their combined net long positions in the six most important futures and options contracts linked to petroleum prices by 50 million barrels in the week to March 6.
Scaring off traders betting on further price increases has been a relentless rise in US crude oil production, which soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia.
US production is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA).
“Oil prices pulled back yesterday as basic fundamentals of oversupply continued to worry the markets,” said Sukrit Vijayakar, director of energy consultancy Trifecta in a note.
The rising US output comes largely on the back of onshore shale oil production.
US crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to a record 6.95 million bpd, the US Energy Information Administration (EIA) said in a monthly report on Monday.
“Oil prices moved lower … after (the) Energy Information Administration published a report that crude production from seven major US shale plays is expected to see a climb,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
That expected increase would top the 105,000 bpd climb in March from the previous month, to what was then expected to be a record high of 6.82 million bpd, the EIA said.
The EIA is due to publish its latest weekly US production data on Wednesday.