Signs of slowdown as OPEC piles pressure on US shale
Oil gained for the second time in three days amid signs that US shale oil producers are succumbing to the Organisation of Petroleum Exporting Countries' (OPEC) effort to defend its share of the global crude market.
Futures rose as much as 2.4pc in New York. Output from prolific US tight-rock formations will decline through July to the lowest level since January, the American Energy Information Administration reported on Monday. Crude stockpiles in the country, the world's biggest oil consumer, probably dropped for a sixth week as refiners prepared to meet increased fuel demand in the summer, a Bloomberg survey showed.
Oil's recovery from a six-year low has stumbled near $60 a barrel amid speculation the price advance since March will spur production. With OPEC maintaining its target, US shale output has come under pressure to rebalance the global market.
"These EIA data show that the OPEC strategy has succeeded so far to originate a contraction in the US shale oil boom," according to Daniela Corsini, an analyst at Intesa Sanpaolo. US shale oil output probably won't extend its decline for long because efficiency gains could help companies raise their production estimates, she said.
Oil producers' group OPEC agreed on June 5 to keep its output ceiling at 30 million barrels a day as it seeks to defend market share against higher-cost producers. The 12-member group, supplying about 40pc of the world's oil, has pumped above that target each month in the past year, data compiled by Bloomberg showed.
Drillers seeking oil in the US have reduced the number of active machines by 59pc to 642 in the past six months, according to Baker Hughes. Its the lowest level since August 2010.