Feb. 2 (UPI) -- A ceiling may be fast approaching for crude oil prices as U.S. supply pressures re-emerge in response to rising production, analysis find.
The price for Brent crude oil, the global standard, topped $56 per barrel this week in a market upswing as traders express confidence about a return to an era of balance. Higher production from some members of the Organization of Petroleum Exporting Countries and from U.S. shale tipped the scales since the middle of the decade and eventually pushed crude oil prices to historic lows last year.
OPEC in November agreed to a managed decline and crude oil prices responded by building back roughly $20 per barrel from historic lows. That's had the unintended consequence of sparking North American recovery as economics improve in areas that were already more resilient to the downturn than expected.
This week, the U.S. Energy Information Administration reported total November crude oil production at 8.9 million barrels per day, an increase of 100,000 bpd from the previous month.
Anthony Starkey, the manager of energy analysis for S&P Global Platts, said in an emailed report that most of the recent gains in U.S. oil production came from offshore and Alaska.
"We have yet to really see the improvement in shale output," he said.
A separate report from consultant group Wood Mackenzie this year uncovered a "dramatic" increase in efficiency as drillers in the Lower 48 get their work done in some cases 30 percent quicker than before the downturn. Meanwhile, U.S. President Donald Trump has favored policies early in his term that support the domestic oil and gas industry.
Starkey said that should eventually manifest itself in higher volumes from U.S. shale. Though OPEC has complied so far with its production agreement, he said the steady increase in U.S. oil production could undermine the intent of the arrangement.
"The window of opportunity for a significant move higher in oil prices in the near term continues to narrow, but is not completely closed as of yet," he said.