Investing.com-- Oil prices rose sharply in Asian trade on Tuesday, rebounding from a four-year low they had hit on persistent concerns over slowing demand and increasing global production.
These concerns remained in play, especially as Diamondback Energy Inc (NASDAQ: FANG ), a major U.S. oil and gas producer, warned that U.S. shale output had peaked and was likely to fall amid soft prices.
Oil markets remained on edge over demand disruptions caused by a U.S.-China trade war, while expectations of higher supplies, following an outsized production increase by the OPEC+ group, also weighed.
Brent oil futures for July rose 1.3% to $61.04 a barrel, while West Texas Intermediate crude futures rose 1.4% to $57.54 a barrel by 22:06 ET (02:06 GMT).
Oil nurses fall to 4-yr lows on demand fears, higher production
Despite Tuesday’s rebound, oil prices remained in sight of a recent four-year low, as markets fretted over uncertainty stemming from the U.S.-China trade war.
While both Washington and Beijing had signaled some openness to trade talks, no dialogue appeared to be taking place.
The trade war has been a major weight on oil prices, as markets feared that both the U.S. and China will face increased economic disruptions, hurting their appetite for oil. A swathe of weak economic readings from the two countries, released over the past week, added to this notion.
Private purchasing managers index data released on Tuesday showed China’s services sector grew at a slower than expected pace in April. This followed weak manufacturing PMIs from last week, as well as gross domestic product data showing an unexpected contraction in the U.S. economy.
Adding to oil’s woes, the Organization of Petroleum Exporting Countries and allies, (OPEC+), over the weekend outlined much higher production hikes than initially expected.
De-facto leader Saudi Arabia is set to lead the cartel into unwinding over two years of production cuts, with several OPEC+ members looking to increase sales volumes to offset weaker oil prices.
US Shale production has peaked, Diamondback Energy warns
U.S. shale production has likely peaked, major Texan oil and gas producer Diamondback Energy warned on Monday, as a recent decline in crude prices made increased production unprofitable.
Diamondback, which is the largest independent oil producer in the Permian Basin, warned that the U.S. oil industry was facing a tipping point from low oil prices, and that lower prices are expected to slow U.S. oil production in the coming months.
“U.S. onshore oil production has peaked and will begin to decline this quarter,” Diamondback said in a letter to shareholders, while also slashing its production and capital expenditure outlook for 2025.
U.S. oil production soared to record highs above 13 million barrels per day in 2024.
Diamondback’s warning comes in contrast to repeated calls from President Donald Trump for higher U.S. energy production.