Rising US crude output drags oil prices down

Global crude oil prices have dropped ahead of crucial data on the US crude oil output. The WTI crude oil and Brent crude prices have declined to $48.3/$51.3 per barrel as the US shale output is expected to rise, causing supply overhang in the global market.

Oil prices have been rallying since last November after OPEC (Oil and Petroleum Exporting Countries) nations agreed on output cut by 1.8 billion barrels per day to support the falling oil prices. Since then, Brent prices have gone up by 21 per cent to $57 per barrel, strongly aiding the revival for oil producers.

OPEC and International Energy Agency are set to release the monthly report today indicating oil output data and outlook for the industry. Analysts expect US shale output to increase as output in Permain basin, America’s biggest shale oil region was expected to hit record high.

Rising US shale output will hinder the efforts by OPEC to cut the output for reviving oil prices and thereby reviving economic growth. Also, oversupply in the global market will push Brent crude prices below $50 mark, making it even harder for oil producing countries to revitalise economic growth.