Investing.com - Oil prices rose on Tuesday morning in Asia amid a potential slowdown in U.S. production, but were capped by rising Russian output and expectations of a reduction in Saudi Arabian crude prices.
Crude Oil WTI Futures for May delivery were trading at $63.20 a barrel in Asia at 11:00PM ET (03:00 GMT), up 0.30%. Brent Oil Futures for June delivery, traded in London, were also up 0.30% at $67.84 per barrel.
Top exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May. Also putting pressure on oil markets is the rising supply. Top producer Russia pumped 10.97 million barrels per day (bpd) of crude in March, up from 10.95 million bpd in February, an 11 month high.
One of the key price drivers going forward will be crude output from the U.S., which has increased by almost a quarter since mid-2016 to 10.43 million bpd, overtaking Saudi Arabia’s and inching close to Russia’s. By year-end the U.S. is expected to become the world’s top producer.
But a dip in drilling activity for new production could imply that the relentless rise in U.S. production could be tapering off toward the middle of the year.
Meanwhile, there is still strong compliance on production curbs from members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, supporting oil prices.
In an effort to control the global oil oversupply, OPEC and a group of non-OPEC producers have been cutting output since January 2017. The pact is set to run through to the end of 2018, but recently OPEC de-facto leader Saudi Arabia has pushed for the production curbs to be extended into 2019.
Meanwhile in Asia, Shanghai Crude Oil WTI Futures for September delivery were down by 3.36% to 403.00 yuan ($66.74) per barrel at 11:00PM ET (03:00 GMT) on Tuesday.
China is taking its first steps towards paying for imported crude oil in yuan instead of the U.S. dollar. A pilot program for yuan payment could be launched as early as the second half of this year.