Oil prices rose on Tuesday morning in Asia amid a potential slowdown in U.S. production but were surpassed by rising Russian output and expectations of a reduction in Saudi Arabian crude prices.
Crude Oil WTI Futures for May delivery were trading at $63.20 a barrel in Asia at 11:00 PM ET (03:00 GMT), up 0.30%. Brent Oil Futures for June delivery, traded in London, were also up 0.30% at $67.84 per barrel. Commodity Trading Signals
Top exporter Saudi Arabia is expected to cut prices for all crude brands it sells to Asia in May. Also putting pressure on oil markets is the rising supply. Top producer Russia cranked up 10.97 million barrels per day (bpd) of crude in March, up from 10.95 million bpd in February, an 11 month high.
One of the key price drivers going forward will be crude output from the U.S., which has raised significantly by almost a quarter since mid-2016 to 10.43 million bpd, overtaking Saudi Arabia’s and inching close to Russia’s. By year-end, the U.S. is expected to become the world’s top originator.
But declivity in drilling activity for new production could imply that the pertinacious rise in U.S. production could be acuminating off toward the middle of the year. Meanwhile, there is still strong acquiescence on production curbs from members of the Organization of the Petroleum Exporting Countries (OPEC) and its collaborator, led by Russia, supporting oil prices.
In an effort to control the global oil superabundance, OPEC and a group of non-OPEC producers have been cutting output since January 2017. The covenant is set to run through to the end of 2018, but recently OPEC de-facto leader Saudi Arabia has pushed for the production bridles to be extended into 2019.
Meanwhile, in Asia, Shanghai Crude Oil WTI Futures for September delivery were down by 3.36% to 403.00 Yuan ($66.74) per barrel at 11:00PM ET (03:00 GMT) on Tuesday. China is taking its pioneer steps towards paying for imported crude oil in Yuan instead of the U.S. dollar. A pilot program for Yuan payment could be launched as antiquated as the second half of this year.