Oil falls below $50 a barrel for first time since December

Sheffield said he hadn’t expected supply and demand in the global oil market to rebalance until next year.

So far, data suggests that OPEC remains 94 percent compliance with the deal; not many in the oil market expected them to pull it off.

But latest data from the USA, which is not part of the output cut pact showed that crude production last week reached a more than one-year high.

“We believe we need to reduce market volatility and raise investment attractiveness of the sector”, he said. “Right now, we’re still stuck in the middle”.

That’s the question being asked in the wake of WTI falling to a almost three month low, which John Kilduff, founding partner of Again Capital says puts oil on a path to test the December low of $49.95 per barrel. Brent crude futures dropped 13 cents, or 0.2 percent, to $55.77 a barrel after settling 1.5 percent in the previous session.

But the oil minister, Jabbar Al-Luaibi, later told Reuters it is too early to discuss whether the policy should be continued.

“Prices are staying at the same level, giving us a sense of stability”, he noted. The OPEC will meet in May to decide whether to extend it. Despite OPEC delivering on its pledge to cut production by 1 million bpd, USA crude oil stockpiles remain at record levels.

“I think the green shoots are definitely here in the U.S.”, Al-Falih said during a keynote talk at CERAWeek.

Still, he cautioned that OPEC’s cuts have not yet altered the overhang in oil inventories substantially. Even if Saudi Arabia, OPEC’s biggest member, continues its policy of holding back some output for emergency use, the IEA’s data point to considerable excess capacity next year.

IEA (International Energy Agency), however, is not concerned with this fall in the price of crude and believes that the major hike is inevitable in near future.

“Oil prices slumped after U.S. crude oil stockpiles surged by 8.2 mmbbl [million barrels] last week, well above forecasts of a 1.3mmbbl increase”, he said.

Crude oil prices fell again on Wednesday, leading to a third straight day of declines in the Dow Jones Industrial Average – the index’s first three-day losing streak since January. Even with a “second wave” of US shale oil growth bumping production by 1.4 MMbbl/d, another round of price volatility could be on the horizon, Birol said.