Oil prices hit their lowest in 11 days on Tuesday on news that U.S. shale oil output in May is expected to post the biggest monthly increase in more than two years, fuelling concerns that U.S. production growth is undermining efforts to cut oversupply.
U.S. government drilling data showed shale production next month was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd.
Global benchmark Brent crude futures were down 34 cents at $55.02 a barrel at 1330 GMT. They touched $54.76 intraday, the lowest since April 7.
U.S. West Texas Intermediate crude futures traded down 25 cents at $52.40 a barrel. Their intraday low was $52.14, also the weakest since April 7.
“EIA (U.S. Energy Information Administration) estimates for a combined 124,000 barrels-per-day growth in U.S. shale production over May have added another bearish element to the market,” wrote analysts at JBC Energy, based in Vienna.
More barrels could be on their way to market from U.S. shale fields as financial companies are investing billions in production, a Reuters analysis showed.
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