Oil dips in Europe on the bearish EIA report

Oil benchmarks are down slightly, possibly due to fears that rising shale output would negate the impact of OPEC-led output cuts.

As of writing, Brent is down 21 cents or 0.30 percent at $69.20/barrel, while WTI is changing hands at $63.89/barrel.

The shale oil output could rise by 1.8 million barrels per day (bpd) over the next year, matching the volume of production cuts implemented by the OPEC, Russia and other major oil-producing nations, said the Energy Information Administration (EIA). Further, shale output is seen rising to 6.438 million barrels per day in January; up 24,000 bpd from December.

The fears of rising shale output seem to have taken a wind out of oil bulls. Also, there is widespread belief that OPEC fears the major central banks would counter the oil-led rise in inflation by quickening the pace of policy tightening. Thus, the Cartel is likely to talk down oil prices.

That said, losses could be restricted today as the militant group Niger Delta Avengers has threatened to launch attacks on Nigeria’s oil sector in the next few days.