Oil prices fell over one per cent on Tuesday as investors grew more concerned about rising US production wiping out OPEC’s efforts to cut the global crude glut.  Anadarko photo.

US oil prices impacted by firing of Rex Tillerson

Oil prices dipped over one per cent on Tuesday on investors’ concerns over record high US crude production that is expected to continue to grow in the coming year.

By 3:11 p.m. EDT, benchmark Brent crude futures fell 34 cents to $6461/barrel.  US WTI was down 1.11 per cent, or 68 cents to $60.68/barrel and the Canadian Crude Index fell 18 cents to $39.52.

Data from the US Energy Information Administration shows that last week, US output rose to over 10.3 million barrels per day (b/d).

The EIA also forecast US crude output from major shale formations to increase next month to a record 6.95 million b/d.

“There’s no stopping us and OPEC’s frustration levels are going to grow,” Philip Streible, senior market strategist at RJO Futures in Chicago told Reuters. Streible was referring to efforts by OPEC and other major producers, including Russia, to curb output and reduce the global glut of crude.

The firing of US Secretary of State Rex Tillerson affected the markets as the move is expected to increase risks to the multilateral agreement to limit Iran’s nuclear capabilities.

With Tillerson’s replacement widely thought to be Mike Pompeo, concerns have been raised about the effects on Iran’s crude output.

In the past, Pompeo called for the agreement to be scrapped and President Donald Trump has also threatened to withdraw from the accord.  Trump says he will exit the deal unless Congress and European allies “fix” it with a follow-up pact.

“The market is having a wobble on the back of the potential impact on future supply from Iran and also for the ramifications for the Middle East as a whole,” Ole Hansen, senior manager at Saxo Bank told Reuters.

May’s oil futures prices are higher than April, which suggests that there are growing concerns about rising crude supplies and a falling need to buy crude now.

“The market switched from backwardation to contango in the crude oil curve today… that’s a situation that implies weakness; it’s a situation that, if it persists, will lead to an increase in storage,” Bob Yawger, director of energy futures at Mizuho told Reuters.

A Reuters poll shows analysts expect US crude inventories to rise for the third straight week for the week ending March 9.