Oil Gains From Four-Year Low on Signs US Output Is Set to Fall
Oil climbed from the lowest closing price in four years on signs that production from the US may contract in the months ahead.
West Texas Intermediate advanced 3.4% to settle above $59 a barrel after tumbling more than 9% during the past six sessions. Diamondback Energy Inc., the largest independent producer in the Permian Basin, trimmed its full-year production forecast and said it expects US shale production will drop in the coming months.
Declining US crude output would help ease the global oversupply that’s expected to form this year as OPEC and its allies bring back production at a faster-than-expected pace. Diamondback projects onshore oil rigs across the US industry will drop by almost 10% by the end of this quarter, and Chief Executive Officer Travis Stice wrote that American output is “at a tipping point.”
Meanwhile, the US cut its forecast for domestic oil production this year in a report developed prior to a weekend supply decision from OPEC and its allies, signaling that the pullback in expectations for American output is set to continue.
Oil has plunged this year as OPEC+ boosts supplies and US President Donald Trump’s trade war weighs on the outlook for demand. The cartel agreed over the weekend to a further supply boost starting in June, with Saudi Arabia warning of additional increases if overproducing members don’t fall in line.
WTI for June delivery rose 3.4% to settle at $59.09 a barrel in New York.
Brent for July settlement advanced 3.2% to settle at $62.15 a barrel.
Source: Bloomberg
