On Monday oil-price gains were limited as Friday's weak U.S. economic data weighed on sentiment and worries U.S. shale production could recover quickly if
prices kept on rising also persisted.
According to ANZ Bank, reports show that certain shale formations, in particular Eagle Ford and Bakken, are beginning to add rigs, which is weighing on sentiment.
Investors also keep a close eye on the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) scheduled for June 5 for further cues on the main issues like Iran’s oil-export plans, though market participants do now wait for significant changes in OPEC policy.
Morgan Stanley noted that U.S. oil producers worry about the
timing or pricing of resuming oil production levels due to the coming
OPEC meeting and the need for some price stability in the market.
But U.S. oil producers are indicating that “$65 may be the new $85,” as break-even costs of oil production have fallen markedly due to new drilling techniques and cost efficiencies, Morgan Stanley’s Adam Longson said.
The Middle East appears to be best positioned for
raising oil production, and activity levels remain high in the area, spurring concerns about OPEC production levels. “The opportunities in
the Middle East, particularly in Saudi and Kuwait appeared to be most
favorable given the ease of extraction and political will,” Longson said.
On the New York Mercantile Exchange, light, sweet crude futures for
delivery in June traded at $59.92 a barrel, up $0.23 in the Globex
electronic session.
July Brent crude on London’s ICE Futures exchange rose $0.16 to $66.97 a barrel, MarketWatch said.
