OIL PRICES: $56 AND MORE
REUTERS - Oil prices were little changed on Tuesday, trading in a tight range as rising U.S. shale output offset OPEC crude production cuts, with investors seeking clearer direction from upcoming inventory data and comments from senior oil officials.
Brent crude LCOc1 was down 3 cents at $55.98 a barrel as of 1020 GMT. U.S. West Texas Intermediate crude CLc1 was flat at $53.20. Both benchmarks have traded in negative and positive territory since the start of Asia trading.
Oil prices have been entrenched in a $3 band since February, failing to take off after OPEC implemented, to a surprisingly high degree, the first cut in production in eight years.
Capping any upsurge has been an inevitable rise in U.S. shale oil drilling after WTI rose firmly above the $50 a barrel level in December following OPEC's sealing of the deal, which also included several non-OPEC producers such as Russia.
"Brent is pivoting around $56, with focus on last week's low at $55 and resistance at $57.20," said Ole Hansen, Saxo Bank's head of commodity strategy.
"Market-wise, we have seen open interest on Brent fall to a six-week low as non-performing or even loss making longs have begun to reduce exposure," he added.
Fund managers doubled their net long positions in Brent, WTI and options to 951 million barrels between the start of November and Feb. 21, betting OPEC's high compliance with the cut agreement would push up prices.
But with Russia's lackluster participation in the cuts, rising shale output and signs that OPEC countries increased their crude exports in February after a January reduction, that bullish sentiment has wavered.
The International Energy Agency (IEA) forecast U.S. shale output to grow at about 1.4 million barrels per day by 2022, saying it would climb even if prices remain around $60 a barrel. A rise to $80 a barrel could precipitate shale growth of 3 million bpd by 2022, it said.
Analysts said markets may take cue from data this week including U.S. oil inventory stocks as recorded by industry group API on Tuesday and the U.S. Energy Information Administration on Wednesday as well as import-export data from China on also Wednesday.
U.S. oil inventories are expected to rise for the ninth consecutive week to hit a record high, according to a Reuters poll.
Major oil company executives, energy ministers, including from Saudi Arabia and Russia, and other top officials such as the head of OPEC are meeting in Houston this week for CERAWeek and observers are keen for any comments that may indicate whether OPEC would extend its output reduction deal.
Russia and Iraq said it was too early to discuss that issue but OPEC's secretary general as well as Saudi officials are expected to speak later on Tuesday.
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