Oil to stabilize amid production worries: Expert

Has oil turned a corner?
Has oil turned a corner?   

Crude oil prices may start to stabilize despite the prospect of increasing production, an industry watcher said Tuesday.

U.S. drillers cut just one rig last week, bringing the number of rigs operating in U.S. oilfields to 659, compared with 1,528 a year ago. Output has not suffered, though, as U.S. oil producers started to get "more and more with less and less," said Kyle Cooper, managing partner at IAF Advisors and Criterion Research.

A worker at Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian Basin outside Midland, Texas.
Brittany Sowacke | Bloomberg | Getty Images
A worker at Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian Basin outside Midland, Texas.

Production of U.S. crude oil was higher in the week ended May 15 than the same week a year ago, according to the U.S. Energy Information Administration.

"That expected decline to really make things recover just hasn't materialized yet as companies keep getting more from less," he said in a CNBC "Power Lunch" interview.

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Cooper, however, believes trends in the last few weeks show high crude production has not necessarily quashed prices.

On Tuesday, U.S. benchmark West Texas Intermediate crude futures fell about 3 percent on concerns about shale producers increasing drilling. Goldman Sachs said Tuesday that if prices stay near their current level—around $60 per barrel—it could spur more drilling activity.

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A production increase combined with a dollar rally and OPEC supply could combine to produce headwinds against an oil price rise, the firm said.