After showing early gains on Tuesday, crude oil futures settled lower after a U.S. government report showed that domestic shale oil production is expected to climb in February, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, February West Texas Intermediate crude rose 11 cents, or 0.2%, to settle at $52.48 a barrel.
On the London ICE Futures Exchange, March Brent crude, the global benchmark, fell by 39 cents, or 0.7%, to end trading at $55.47 a barrel.
In a report issued Tuesday ahead of the New York Mercantile Exchange settlement, the Energy Information Administration forecast a monthly rise of 41,000 barrels a day in February oil production to 4.748 million barrels a day from seven major U.S. shale plays.
Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, was expected to see a rise of 53,000 barrels a day—the largest increase among the big shale plays.
The forecast appeared to contradict some of Saudi Oil Minister Khalid al-Falih’s comments Tuesday at the World Economic Forum in Davos, Switzerland.
Al-Falih had said it would take time for U.S. producers to regain lost ground. U.S. oil shale producers “will find they need higher prices” because the most prolific reservoirs are being exhausted and squeezed contractors are increasing the amount they charge, he said.
Crude prices had found support early on the session after Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, touted the effect of its production cut pact with major non-OPEC producers. Saudi oil minister, Khalid al-Falih, told reporters Monday in the United Arab Emirates that the market would rebalance by the end of the first half of 2017, according to media reports.
Falih also implied that production cuts could end after six months and that may lead to complacency from producers, Commerzbank said in a note.
Before the report’s release, futures prices were on track to mark their highest settlement levels in more than week.
OPEC has established a committee to keep tabs on signatories’ production and it will reportedly meet later this week for the first time.
In the near term, investors will be pouring over OPEC’s monthly production report slated for publication Wednesday in Vienna. The report will only contain December figures but analysts will search for early clues or comments on the production cut agreement.
The weekly U.S. crude inventory reports from the American Petroleum Institute and EIA will be released on Wednesday and Thursday, respectively—each coming out a day later than usual due to the Martin Luther King, Jr. public holiday.
Meanwhile, February natural gas fell by under a penny, or 0.2%, to settle at $3.412 per million British thermal units on the New York Mercantile Exchange.
