Crude prices rose on Tuesday after the U.S. Energy Information Administration said it expected U.S. shale oil output to record its first monthly decline in over four years. Front-month Brent crude futures were trading up 34 cents a $58.27 a barrel by 0106 GMT, while U.S. crude had risen 31 cents to $52.22.
The EIA expects U.S. shale production to fall by 45,000 barrels to 4.98 million barrels per day in May from April. That would underscore how record crude output from the U.S. shale boom may be backtracking after global markets saw prices effectively slashed by 60 percent since June on oversupply and lackluster demand.
While political instability in the Middle East also helped push prices higher, analysts said that high global production and stocks were capping gains. “Geopolitical risk in oil markets remains elevated. From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise,” JP Morgan said in a note.