TOKYO, April 14 (Reuters) - Oil prices rose on Tuesday after
a U.S. agency said shale output in the world's biggest crude
producer would fall by the most on record in April, adding to
cuts from other major producers.
Brent LCOc1 futures rose 56 cents, or 1.8%, to $32.30 a
barrel by 0017 GMT after settling 0.8% higher on Monday. U.S.
West Texas Intermediate (WTI) crude CLc1 was up 47 cents, or
2.1%, at $22.88, having dropped 1.5% the previous session.
The Organization of the Petroleum Exporting Countries, along
with Russia and other producing countries - known as OPEC+ -
agreed over Easter to cut output by 9.7 million barrels per day
(bpd) in May and June, equal to about 10% of global supply
before the viral outbreak.
With other producers, including the world's biggest, the
United States, reducing output as well, the estimated reduction
in production is about 19.5 million bpd.
But analysts, oil industry executives and others say no
matter how the numbers are massaged the reduction will not be
enough to match a contraction of around a third of global oil
demand due to the outbreak. Oil prices are still down by over 50% so far this year.
"These cuts, especially relative to the inflated production
figures over the last month, will not bring the market back into
balance unless we see a dramatic "V-shaped" economic recovery in
the coming weeks," FOREX.com said in a note.
Inventories are expected to fill up fast even as some
countries among the G20 agreed to buy oil for their national
reserves.
Still, U.S. production is falling in tandem with a drop in
prices and there are signs the coronavirus outbreak may have
peaked in some areas of the world. U.S. shale oil output is expected to have the biggest
monthly drop on record during April, the U.S. Energy Information
Administration (IEA) said on Monday. Production has been sliding for several months, but the
declines are expected to accelerate sharply in April with a loss
of nearly 200,000 bpd of production, the IEA said.
That would bring shale oil output, which has been the driver
of the sharp growth in U.S. production, to 8.7 million bpd.
Numerous U.S. producers, including majors like Exxon Mobil
and Chevron, have said they will cut spending and expect to
produce less crude in the coming months.