By Karolin Schaps
LONDON (Reuters) - Oil prices fell on Tuesday on news that U.S. shale oil output was expected to post the biggest monthly rise in more than two years, fuelling concerns that U.S. production growth is undermining OPEC-led efforts to rein in oversupply.
The latest U.S. government drilling data showed shale production in May was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd.
Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel at 0803 GMT. They touched an intraday low of $54.98, the weakest level in 11 days.
U.S. West Texas Intermediate (WTI) crude futures traded down 21 cents at $52.44 a barrel, the lowest since April 10.
"EIA (U.S. Energy Information Administration) estimates for a combined 124,000 barrels-per-day growth in U.S. 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 U.S. shale fields as financial companies are investing billions in production, a Reuters analysis showed.
Members of the Organization of the 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 U.S. 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 is scheduled for release by the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT) on Tuesday, followed by the official EIA report at 10:30 a.m. EDT (1430 GMT) on Wednesday.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson)
Disclaimer: No Business Standard Journalist was involved in creation of this content
