After an upbeat performance last week, oil prices edged lower for a second day Tuesday. This latest move comes as investors expect figures to show US oil production has risen.
Brent crude was worth around $62.81 per barrel, while WTI oil was down to $56.44 per barrel around 1pm Tuesday, UK time. Both were around 0.5% lower than Monday.
US predicts rising shale output
Investors increasingly opted not to bet on higher oil prices, following a report from the International Energy Agency showing it expects rising US shale oil and gas production to at least be among the biggest gains in the history of the industry.
The IEA added that the likely boom in US production will place it among the top fossil fuel producers in the world, by 2025. It will also become a net exporter of oil.
“A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the US becomes a net exporter of oil in the late 2020s,” the IEA said in its 2017 world energy report.
China demand in focus
Also weighing on the oil price, is the increasing prospect of a slower pace of economic growth in China. The latest run of data published Tuesday showed investment, consumer spending and industrial output all expanded at a slower pace in October than September.
Add to that China’s increasing stockpiling for internal use and demand for oil could slow more than expected.
However, the expected confirmation of OPEC’s continued commitment to capping output levels should work to keep a floor under oil prices. Indeed, the IEA also suggests that demand for oil will remain supported by lower prices, going forward.
“With the United States accounting for 80% of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil,” the IEA report stated.