Oil prices fall on expected continued increase in U.S. shale output

Iran says supports extending oil output cuts

Iran says supports extending oil output cuts

The latest U.S. government drilling data showed shale production in May was set to rise to 5.19-million barrels per day (bpd), with output from the Permian basin, the largest U.S. shale region, expected to reach a record 2.36-million bpd.

In the oil patch, United States drillers last week added rigs for a 13th straight week, a sign output gains there will continue.

Brent on the ICE Futures Europe exchange was down 35 cents at $55.01 a barrel.

".the large new production capacity and investment we will need in the future are lagging, and in fact missing in many cases. while the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind".

U.S. crude inventories probably shrank by 1.7 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report tomorrow. Prices dropped 53 cents, or 1 per cent, to US$55.36 yesterday.

Gan shrugged off the possibility of OPEC members defaulting on their pledges, saying "they know how fragile the oil market" is and any signs of cheating will wreck their previous sacrifices. USA explorers added 11 rigs last week, capping the longest stretch of gains since 2011, according to Baker Hughes Inc. data.

Members of the group are scheduled to meet on 25 May to discuss the possible extension to the output cut deal beyond June. That may be about to change, said BMI Research.

US West Texas Intermediate (WTI) crude futures were also down 4 cents at $52.61 a barrel.

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The IEA sees global growth of 485,000 barrels a day in output this year, compared with a decline of 790,000 barrels a day in 2016.

It is now half time for the six-month oil production cuts agreed by Opec and eleven non-Opec countries and so far, the game has gone fairly well for producers, says the International Energy Agency (IEA) in a new report.

The Paris-based IEA, which advises industrial nations on energy policy, said on Thursday supply and demand in the global oil market was close to matching after a fall in stockpiles in developed countries in March.

Thus, Saudi Arabia plans to develop 30 projects in the field of solar and wind energy to increase electricity production and reduce oil consumption, according to the Minister of Energy, Industry and Mineral Resources of Khalid al-Falih.

The U.S. drill rig count climbed to 683 last week, the highest since April 2015 and a 13th week of gains, Baker Hughes data showed on Friday.

"U.S. shale oil producers, particularly in the Permian basin, seem well convinced that they can make money at current prices and we're in no position to argue", Timothy Evans, a Citi Futures analyst said in a recent note.

Highlighting the fact that the demand for Iran's crude exceeds its supply, Zanganeh noted, "We have no worries on selling oil, nor do we intend to wage a price war".

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