Oil prices hit their lowest in 11 days on Tuesday on news that US shale oil output in May is expected to post the biggest monthly increase in more than two years, fuelling concerns that US production growth is undermining efforts to cut oversupply.
The latest US government drilling data showed shale production in May was set to rise to 5.19 million barrels per day, with output from the Permian play, the largest US shale region, expected to reach a record 2.36 million bpd, Reuters reported.
Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel. They touched an intraday low of $54.98, the weakest level in 11 days. US West Texas Intermediate crude futures traded down 21 cents at $52.44 a barrel, the lowest since April 10.
"The US Energy Information Administration estimates for a combined 124,000 barrels-per-day growth in US shale production over May have added another bearish element to the market," wrote analysts at JBC Energy, based in Vienna.
More barrels could be on their way to market from US shale fields as financial companies are investing billions in production, a Reuters' analysis showed.
Members of the Organization of Petroleum Exporting Countries are cutting oil production by 1.2 million bpd from Jan. 1 for six months, the first reduction in eight years.
The energy minister of OPEC member the United Arab Emirates said on Tuesday he saw healthy oil demand growth this year and believed inventories would fall.
A preliminary Reuters poll showed analysts expected US crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week. Analysts said they expected crude oil inventories to have fallen by around 1.5 million barrels last week.
Inventory data was scheduled for release by the American Petroleum Institute on Tuesday, followed by the official EIA report on Wednesday.
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