Oil falls on US shale output

Oil prices fell yesterday on evidence of higher US oil production and increasing US crude inventories, but reports of a fall in Iranian oil exports helped to limit losses. Brent crude was down 50 cents a barrel at $80.28 by 1320 GMT. US light crude was 40 cents lower at $71.38. “Shale oil production continues unabated in the United States,” said Carsten Fritsch, commodities analyst at Commerzbank. “Rising US oil production is one key reason why the global oil market is likely to be amply supplied next year.” Oil production from seven major US shale basins is expected to rise by 98,000 barrels per day (bpd) in November to a record of 7.71 million bpd, the US Energy Information Administration (EIA) said.

The largest change is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 53,000 bpd to a new peak of 3.55 million bpd. US oil production has increased steadily over the last five years, reaching a record high of 11.2 million bpd in the week to Oct. 5. But infrastructure has not kept pace with rising output, filling domestic tanks.

“Once pipelines and oil terminals are built connecting the Permian to the US Gulf Coast, then there will be a big step up in US crude oil exports,” Harry Tchilinguirian, oil strategist at French bank BNP Paribas told Reuters Global Oil Forum. US crude stockpiles are expected to have risen last week for the fourth straight week, by about 1.1 million barrels, according to a Reuters poll ahead of reports from the American Petroleum Institute (API) and the US Department of Energy’s Energy Information Administration (EIA).