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Oil set for weekly loss as US shale boom counters IEA warning
[TOKYO] Oil headed for a weekly loss as investors weighed surging US crude production against a warning from the International Energy Agency of an impending shortfall in global supplies later this year.
Futures in New York were little changed Friday, set for a 1.4 per cent decline this week. While US crude production jumped to 10.4 million barrels a day last week, according to government data, the dire situation in Venezuela's energy sector may exacerbate a worldwide supply deficit expected later this year, the Paris-based IEA said.
Oil has been trading in a tight range this month, with prices hovering around US$60 a barrel as rising US output has continued to stoke fears that as shale boom will limit price increases. Meanwhile, the Organization of Petroleum Exporting Countries and allied producers are continuing production cuts in an effort to drain a global glut.
"Oil prices held above US$60 this week and have been stable, despite concerns over the balance between demand and supply and rising US production," Jun Inoue, a senior economist at Mizuho Research Institute Ltd, said by phone from Tokyo. A potential supply shortfall "would likely be offset by rising US shale production."
West Texas Intermediate for April delivery traded at US$61.19 a barrel on the New York Mercantile Exchange at 11:04am in Tokyo. The contract is down 89 cents this week. Total volume traded was about 73 per cent below the 100-day average.
Brent for May settlement lost 4 US cents to US$65.08 a barrel on the London-based ICE Futures Europe exchange. The contract is down 0.6 per cent this week. The global benchmark traded at a US$3.84 premium to WTI for the same month.