Crude prices rose amid speculation that the low price level will force some oil producers to curb investment and limit future supply growth, Bloomberg News reported.
Brent futures rose for the first time in six days, up as much as 1.1 percent in London on Tuesday and reversing an earlier loss of 1.4 percent, the report said. WestTexas Intermediate advanced in New York.
Citigroup said US shale oil production will continue to grow, but industry consultant Energy Aspects said the expansion may slow next year.
US production is at its highest in three decades, exacerbating a global glut.
Price competition, meanwhile, intensified in the Organization of Petroleum Exporting Countries after Iraq, the group’s second-largest producer, reduced its Basrah Light crude price for January to the lowest in at least 11 years.
Saudi Arabia, which led OPEC’s decision to maintain rather than cut output at a Nov. 27 meeting, last week offered supplies to its Asian customers at the deepest discount in at least 14 years.
“After [Monday's] solid fall, it’s no surprise that oil is taking a small breather,” Bjarne Schieldrop, chief commodities analyst at Oslo-based SEB, was quoted as saying.
“The market will remain volatile until it finds the Goldilocks price that dampens US shale oil supply growth, stimulates the global economy and still lets OPEC members survive.”
The US oil boom has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota. Production increased to 9.08 million barrels a day through Nov. 28, the fastest rate in weekly records that started in January 1983, data from the Energy Information Administration showed.
US growth is at risk of slowing in the second half of next year and in 2016, Amrita Sen, chief oil market analyst at consultant Energy Aspects, said at a Platts conference in Dubai.
Market fundamentals don’t warrant a price as low as US$60 a barrel, she said.
But Ed Morse, head of commodities research at Citigroup, said in the same conference that shale production will keep growing because the rate of decline from wells has been overstated.
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