Optimism in the oil market that lifted prices by the most in almost three weeks eased as investors assessed the outlook for consumption against fears that U.S. shale output will swamp demand.

After jumping 2.2 percent on Monday, prices were little changed in New York on Tuesday. On the one hand, estimates for growing crude demand and analysts’ forecasts for shrinking stockpiles at Cushing in Oklahoma, a key American storage hub, helped support futures. But the International Energy Agency’s warning that Organization of Petroleum Exporting Countries (OPEC) production cuts will unleash a supply surge from the U.S. and other producers sparked caution in the market.

Oil has traded above $60 a barrel for most of this year as the OPEC and allied producers continue efforts to drain a global supply glut through voluntary cuts. Yet concern that record U.S. crude output will climb further has capped any significant rallies. OPEC producers need to “ reconsider” their output plans in light of rising U.S. oil production, the IEA’s Executive Director Fatih Birol said.

“The news situation on the oil market should really have pushed prices down,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The production growth in the U.S. should be sufficient almost on its own to meet the expected rise in global oil demand until 2020.”

West Texas Intermediate for April climbed as much as 31 cents to $62.88 a barrel on the New York Mercantile Exchange and traded at $62.66 as of 10 a.m. London time. The contract advanced $1.32 to settle at $62.57 on Monday, the biggest jump since Feb. 14. Total volume traded Tuesday was about 20 percent below the 100-day average.

Brent for May settlement was little changed at $65.60 a barrel on the London-based ICE Futures Europe Exchange, after rising $1.17 on Monday. The global benchmark traded at a $3.13 premium to May WTI.

The production cuts that helped push prices above $60 a barrel are triggering a flood of supply from OPEC’s rivals including Brazil and Canada, which will cover all growth in global demand until 2020, the IEA said. The agency may also raise its forecast for U.S. output if oil stays above $60 a barrel, Birol said during the CERAWeek oil conference in Houston. Non-OPEC growth is so strong that the oil market will change for years, he said.

Optimistic Views

Still, there are spots of optimism too. While global demand growth will slow by 2023, it will still increase by an average 1.1 percent a year, and peak consumption is not yet in sight, the agency said.

The comments from the IEA come ahead of the widely watched U.S. government inventory data on Wednesday. Crude stockpiles in Cushing probably slid for an 11th straight week to the lowest since 2014, according to a Bloomberg survey. Meanwhile, nationwide inventories are forecast to have risen by 2.5 million barrels last week.

Other oil-market news:

It’s too early for OPEC to discuss extending production cuts into 2019, OPEC Secretary-General Mohammad Barkindo said in Houston. A Monday night meeting between OPEC representatives and their competitors in the U.S. shale industry will yield “nothing but platitudes,” former EOG Resources Inc. Chief Executive Officer Mark Papa said before the gathering. — Bloomberg

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