Investing.com – Crude settled lower on Tuesday, after the Energy Information Administration (EIA) reported that U.S. shale output in May was set to experience the biggest monthly increase in more than two years.
On the New York Mercantile Exchange crude futures for May delivery lost 24 cents to settle at $52.41 a barrel, while on London's Intercontinental Exchange, Brent fell by 11 cents to trade at $54.76 a barrel.
The EIA’s monthly Drilling Productivity report showed U.S. shale production was set to rise to 5.19 million barrels a day in May.
The expected ramp-up in shale production fuelled concerns that rising U.S. oil production could hinder OPEC’s efforts to cut excess supply, which has pressured prices over the last three years.
Meanwhile, market participants looked ahead to a fresh batch of inventories data, expected to show a dip in U.S. crude inventories.
Inventories data from the American Petroleum Institute at 16:30 EDT, and the U.S. Energy Information Administration at 10:30 EDT on Wednesday is expected to show U.S. crude stockpiles fell by 1.470 million barrels.
Despite concerns over a rise in U.S. shale output, some analysts, however, are adamant that OPEC-led cuts would offset rising levels of U.S. shale production.
“In general, there is still upbeat sentiment that, even if U.S. shale production rises, OPEC’s output reduction will bring inventories back down to sustainable long-term levels.” FocusEconomic noted in its Consesus Forecast Commodities report in April.
OPEC is widely expected to announce that its members will extend the current deal to cut global oil supply at its next meeting on May 25.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd). The deal to cut supply began at the start of this year for period of six months until June.