Oil prices on Tuesday erased earlier gains as investor concerns about rising U.S. oil output offset signs of stronger demand and faith in the ability of OPEC production curbs to curtail supply.
U.S. West Texas Intermediate (WTI) crude for April delivery CLc1 was down 15 cents, or 0.2 percent, at $63.76 a barrel by 0532 GMT. The contract on Monday rose to its highest since Feb. 6 at $64.24.
Brent crude LCOc1 in London was down 10 cents, or 0.2 percent, at $67.40 a barrel.
Soaring U.S. production is upending global oil markets, coming at a time when other major producers – including Russia and members of the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) – have been withholding output to prop up prices LCOc1.
The United States will overtake Russia as the world’s biggest oil producer by 2019 at the latest, the International Energy Agency (IEA) Executive Director Fatih Birol said on Tuesday.
“U.S. shale growth is very strong, the pace is very strong … The United States will become the No.1 oil producer sometime very soon,” he told Reuters separately.
U.S. output was 10.27 million barrels per day (bpd), according to weekly government data released last Thursday, higher than the latest figures for Saudi Arabia, the world’s largest exporter, and just below Russia.
Earlier on Tuesday prices gained, extending multi-day rises for both crude futures. Last week, the U.S. Energy Information Administration (EIA) said there was a surprise draw on oil stockpiles amid a drop in imports and a surge in exports.
“It’s the dwindling Cushing inventories that continue to resonate with oil traders, while another supply disruption in Libya has provided that extra fillip,” said Stephen Innes, head of trading for the Asia-Pacific region at futures brokerage Oanda in Singapore.
He was referring to Libya’s National Oil Corp’s declaration of force majeure on Saturday for the 70,000-bpd El Feel oilfield after it was closed by a protest by guards.
“Given last week’s Cushing collapse in oil stockpiles, traders are keenly awaiting this week’s U.S. inventories data,” Innes added. Cushing, Oklahoma, is an oil storage hub and the delivery point for the WTI futures contract.
U.S. crude inventories are forecast to have risen by 2.7 million barrels last week, a preliminary Reuters poll showed on Monday.
Gasoline stocks are expected to fall by 600,000 barrels, while distillate inventories, which include heating oil and diesel fuel, may decline by 700,000 barrels.
The American Petroleum Institute is scheduled to release its weekly data later on Tuesday, followed by the EIA on Wednesday.