OPEC should beware as US shale producers are set to steal a bigger slice of the market in Asia, which consumes more oil than any other region, according to industry consultant Wood Mackenzie Ltd.
US West Texas Intermediate (WTI) crude futures were at $62.22 a barrel up 18 cents, or 0.3 per cent while Brent crude futures were at $65.70 per barrel, up 21 cents, or 0.3 per cent, from their previous close.
Brent crude, which is the worldwide benchmark of crude oil, had opened 2018 at $64.73.
"The rapidly growing US shale production is making it virtually impossible for prices to rise", according to analysts at Commerzbank. Total output should now average 10.7 million barrels a day this year, up from a previous forecast of 10.6 million barrels a day. The news is not likely to change the outlook for rising USA production which is now up to 10.37 million barrels per day (bpd).
In oil markets, US energy companies, last week, cut oil rigs for the first time in nearly two months, RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said on Friday.
That has undercut some of the enthusiasm for oil, as investors weigh increased United States supply against the likelihood that the Organisation of the Petroleum Exporting Countries and non-Opec producers will maintain supply cuts that have been in effect for more than a year.
On one side is Saudi Arabia, which wants oil prices at $70 a barrel or higher, and on the other is Iran, which wants them around $60.
ING's Patterson agrees that keeping a lid on price hikes is necessary; in an interview in Singapore he said, "We need to see prices in the short-term trade below $60 to reduce that incentive for USA producers".
On Friday, Baker Hughes (BHGE) said that the number of active USA rigs drilling for oil (http://www.marketwatch.com/story/baker-hughes-reports-first-fall-in-us-oil-rig-count-in-7-weeks-2018-03-09) fell by four to 796 this week. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices. The consensus forecast by economists is for inflation of 1.8% in February, thus keeping its level from January.