Is the Oil Rally on the Rise?

Opec headquarters in Vienna. The International Energy Agency said that Saudi Arabia and Angola’s capacity to pump crude will fall more deeply in the next few years than any other members in Opec

"The rapidly growing USA shale production is making it virtually impossible for prices to rise", according to analysts at Commerzbank.

While oil rebounded Friday from a three-week low as equities gained, crude has struggled to recoup losses from last month's broader market slump.

US West Texas Intermediate (WTI) crude futures were at $62.22 a barrel up 18 cents, or 0.3 per cent while Brent crude futures were at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.

The renewed confidence in oil comes as investors increasingly grow concerned that US crude producers may undermine efforts by the Organization of Petroleum Exporting Countries and its allies to curb output.

The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month.

Oil markets gained yesterday on the back of a drop in the number of United States rigs drilling for more production and as the U.S. economy continued to create jobs, which industry hopes will drive higher fuel demand. The resulting fallout could drag down crude prices after a rally of more than 40 percent since June, he said.

"Currently, there's downward pressure on oil prices with concerns remaining over surging US crude production", Kim Kwangrae, a commodities analyst at Samsung Futures, said by phone in Seoul.

Total volume traded was about 53% below the 100-day average.

Both crude benchmarks dropped by around 1 percent on Monday after the U.S. Energy Information Administration said output from the shale basin would hit a new record high in April.

Brent was last at $64.96, down 0.81 percent on the day.

Official weekly USA crude production and inventory figures will be published by the Energy Information Administration (EIA) later on Wednesday.

The news is not likely to change the outlook for rising US production which is now up to 10.37 million barrels per day (bpd). Crude shipped overseas from the US will soar to nearly 4 million barrels a day by the mid-2020s, rivaling shipments from Iraq and Canada, it said last week. Meanwhile, stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, probably were little changed after 11 straight weeks of declines.

Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.5%, at $1.89 a gallon.

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