For the first time since the Organisation of Petroleum Exporting Countries, OPEC, agreed to cut output in November 2016, oil prices slid below $45 a barrel on Thursday.
PREMIUM TIMES gathered that the development came as U.S. shale confounded OPEC’s attempts to prop up prices.
In less than 10 minutes Friday morning, futures slumped more than $1 amid a surge in volume, Bloomberg reports.
They have collapsed 9.3 per cent this week, sliding to the lowest since November 15, two weeks before the OPEC signed a six-month deal to curb production aimed at easing a global glut.
The decline is being driven by expanding U.S. output before OPEC is set to decide whether to prolong its cuts.
While OPEC’s curbs drove oil prices in early January to the highest since July 2015, the increase encouraged U.S. drillers to pump more.
Analysts said the result has been 11 weeks of expansion in American production in the longest run of gains since 2012.
On Thursday, while prices were still more than 50 percent below their peak in 2014, surging shale output triggered crude’s biggest collapse in a generation and left rival producers scrambling to protect market share.
Victor Shum, a Singapore-based vice president at IHS Energy, told Bloomberg that, “We’re seeing a strong reaction and a change in mood,” adding that prices that “overshot” to the mid-to-high $50s after the output deal are now “back to reality” amid surging American supplies.
PREMIUM TIMES reports that data obtained on Thursday showed that West Texas Intermediate for June delivery dropped as much as $1.76, or 3.9 percent, to $43.76 a barrel on the New York Mercantile Exchange, and was at $44.76 at 3:01 p.m. in Hong Kong.
Brent for July settlement slumped as much as $1.74, or 3.6 percent, to $46.64 a barrel on the London-based ICE Futures Europe exchange. Prices are down 7.8 percent this week, heading for a third weekly decline.
According to data from the Energy Information Administration, United States’ crude production rose to 9.29 million barrels last week, the highest level since August 2015.
Ibe Kachikwu, Nigerian petroleum minister says although OPEC is likely to prolong curbs for a further six months although American shale supply remains a concern.
OPEC will meet on May 25 in Vienna to decide whether to extend supply cuts through the second half.
