Abu Dhabi: Oil prices are expected to trade lower in the coming days due to seasonal weakness in demand and rise in shale oil production in the US, analysts said.

Brent is currently trading at $66.21 (Dh242.99) per barrel and the US benchmark West Texas Intermediate at $62.34 per barrel.

“For oil prices, near term risks are skewed to downside. We are in the midst of a period of seasonal demand weakness which coupled with the undeleting rise in US shale, makes for a bearish cocktail,” Stephen Brennock, a London-based analyst from brokerage firm PVM Oil Associates told Gulf News.

Shale oil production from the US has been going up in the last few months as oil prices rise due to production cut agreement between Opec and non-Opec member countries and geopolitical tensions in the Middle East and elsewhere.

EIA (Energy Information Administration) expects US oil production averaging 10.7 million barrels per day in 2018, an increase of 1.4 million barrels per day from 2017. Oil rig number is also steadily increasing as oil prices move up.

Rig count in the US has gone up by 6 rigs to 990 last week, according to a report by services firm Baker Hughes.

“Opec versus US Shale’ story will dictate oil prices in the coming quarter,” said Benjamin Lu, an analyst with Singapore based Phillip Futures.

Range bound levels

“As oil props up gradually with Opec’s controlled production policy, US shale producers will respond with increased output to capitalise on higher margins. Hence, range bound levels are to be expected in crude oil prices for the coming weeks.”

He forecast Brent to trade between $65 to $70 per barrel and US crude West Texas Intermediate between $60 to $65 per barrel in the coming weeks.

Brennock also said new tariffs announced by the US president Donald Trump does not bode well for the oil market.

“Economic optimism and oil consumption go hand-in-hand therefore any adverse impact on the health of the global economy will dampen oil demand growth prospects.”

The appointment of a new US Secretary of State is also not expected to lend much support to oil prices.

“A flare up in geopolitical tensions may well be on the cards but the Iranian nuclear deal is unlikely to be scrapped given strong levels of international support for the deal,” said Brennock on Mike Pompeo who replaced Rex Tillerson as the new US Secretary of State last week.