In early Tuesday’s Asia trade crude oil prices lost ground, as market participants derived profits after the recent rally in crude prices, thus underscoring the lack of confidence in global market’s capability to rebalance itself in the short term.
Oil prices went up abruptly overnight right after the International Energy Agency told that American shale-oil production will most likely slump by 600,000 barrels a day this year. Furthermore, in 2017 a 200,000 drop is expected.
The agency also informed that up to 4.1 million barrels a day are going to be added to global supply in the period between 2015-2021. That’s an obvious decrease from total growth of about 11 million barrels from 2009-2015.
By the way, the agency gave a warning – while crude prices are expected to surge once the market starts rebalancing, the overall availability of resources, which can be easily accessed will probably restrict the scope of surges at least in the nearer future.
American crude inventories are at 504 million barrels now. Analysts stress that the resilience of American shale producers to resist low prices has already exceeded expectations from the OPEC members.