Crude registers price fall as US shale starts responding to OPEC production cut

Crude has ended its ten-week consecutive rise to stop and fell to $ 54.3 (Brent) from the previous week high of $58. This was amidst prospects of robust supply by the US Shale and Iraqi producers.

The new price trend of crude shows limitations of OPEC’s production cut. The oil cartel agreed for a production cut for the first time in nearly eight years in last month. On November 30 last year, the cartel decided to trim output to 32.5 mn barrels a day, supported by Russia.

Markets were keenly observing the success of the OPEC policy in a world market where several producers were outside the cartel besides the rookie shale going ultra-market oriented.

“Concerns about the impact of rebounding U.S. oil production are likely to limit oil’s ability to rise too quickly, even as the global supply/demand balance tightens,” the Reuters quoted Robbie Fraser -a commodity analyst.

Reports from the US indicate reactivation of production by shale. Houston-based oil-field services company Baker Hughes Inc. reported that a number of rigs were redeployed amidst rising price.

Experts predict that shale will be active at around $60 and the market is anticipating it

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