Investing.com – Crude oil prices settled lower on Tuesday after Opec said it expected a surge in North American shale output to cap demand for the cartel’s crude oil.
On the New York Mercantile Exchange crude futures for December delivery fell 15 cents to settle at $57.20 a barrel, while on London’s Intercontinental Exchange, Brent added lost 56 cents to trade at $63.71 a barrel.
Crude oil pared some of Monday’s gains as an Opec report suggested that the recent rally in crude prices – as a result of the output-cut agreement – would encourage North America shale producers to ramp up output, weakening the oil cartel’s efforts to rebalance the market.
Opec in its 2017 World Oil Outlook revised upwards North American shale oil to 5.1 million barrels per day (bpd) from 4.1 million bpd, citing the recent rally in crude prices as one of the catalysts to drive up shale output.
The U.S. Energy Information Agency in separate report also revised upwards its estimate for domestic crude oil production.
U.S. crude oil output will rise by 720,000 bpd to 9.95 million bpd in 2018, the EIA said. Last month, it expected a 680,000 bpd year-over-year increase to 9.92 million bpd.
The duo of reports come ahead of fresh inventory data from the American Petroleum Institute on Tuesday as well as a further report from EIA on Wednesday expected to show a decrease in domestic crude inventories.
Traders are expected to closely monitor U.S. crude production which remains just 57,000 barrels shy of record highs.