Oil prices extended losses on May 28 as Saudi Arabia and Russia said they may increase supplies while U.S. production gains show no signs of slowing.
Brent crude futures stood at $75.35 a barrel at 0913 GMT, down $1.09 from the previous close and after touching a three-week low of $74.49 earlier in the session.
U.S. West Texas Intermediate (WTI) crude futures were at $66.69, down $1.19, after hitting a six-week low of $65.80.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia began withholding 1.8 million barrels per day (MMbbl/d) of supplies in 2017 to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade at less than $30/bbl.
Prices have soared since the start of the cuts last year, with Brent breaking through $80 this month, triggering concerns that high prices could crimp economic growth and stoke inflation.
"The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth," Chetan Ahya, chief economist at U.S. bank Morgan Stanley, wrote in a weekend note.
To address potential supply shortfalls Saudi Arabia, de-facto leader of producer cartel OPEC, and top producer Russia have been in talks about easing the cuts and raising oil production by 1 million bpd.
"Given that our crude balance is short some 825,000 bbl/d over [the second half of the year], a gradual increase of about 1 MMbbl/d would probably limit stock draws to quite some extent," Vienna-based consultancy JBC Energy said.
Meanwhile, surging U.S. crude production showed no sign of abating as drillers continue to expand their search for new oilfields to exploit.
U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production will continue to rise.
U.S. crude output has already surged by more than 27% in the past two years, to 10.73 MMbbl/d, ever closer to Russia's 11 MMbbl/d.
Recommended Reading
E&P Highlights: Aug. 26, 2024
2024-08-26 - Here’s a roundup of the latest E&P headlines, with Ovintiv considering selling its Uinta assets and drilling operations beginning at the Anchois project offshore Morocco.
OMV Makes Gas Discovery in Norwegian Sea
2024-08-26 - OMV and partners Vår Energi and INPEX Idemitsu discovered gas located around 65 km southwest of the Aasta Hansteen field and 310 km off the Norwegian coast.
E&P Highlights: Sep. 2, 2024
2024-09-03 - Here's a roundup of the latest E&P headlines, with Valeura increasing production at their Nong Yao C development and Oceaneering securing several contracts in the U.K. North Sea.
Breakthroughs in the Energy Industry’s Contact Sport, Geophysics
2024-09-05 - At the 2024 IMAGE Conference, Shell’s Bill Langin showcased how industry advances in seismic technology has unlocked key areas in the Gulf of Mexico.
Devon Energy Expands Williston Footprint With $5B Grayson Mill Deal
2024-07-08 - Oklahoma City-based Devon Energy is growing its Williston Basin footprint with a $5 billion cash-and-stock acquisition from Grayson Mill Energy, an EnCap portfolio company.