Global oil supply is rising rapidly as shale oil production has surged in the US and is expected to expand to Russia and the Middle-East, where output from conventional oil is declining, research from ETF Securities has found.

At the same time, ETF Securities said that major energy reporting agencies have reduced their estimates of global oil demand on a reduction in forecasts of US and China demand, and a deterioration of demand conditions in Europe.

The research revealed that an increase in supply from shale, together with an uncertain global growth outlook will likely keep oil prices trading in a relatively narrow range. Near-term oil price upside will likely be capped by concerns about the sustainability of the US and China economic recoveries, while downside – barring a large growth scare – should be limited to around $80 per barrel for WTI (West Texas Intermediate), as below that level production will start to become uneconomic for many shale producers.

Meanwhile, ETF Securities predicts that US total oil output will rise 815,000 barrels per day, from 6.3 million barrels a day in 2012 to 7.2 million barrels a day in 2013 - a level not seen since the early 1990s - and a reverse on the previous 20 years of decline in US oil production history.