A Rise in Saudi Production Sends Oil Tumbling

But the energy ministry said the amount of crude it supplied to the market in February was 9.9 million bpd, down from 9.99 in January. This was the highest level since record keeping started in 1982.

But the main culprit is US shale, which according to the US Energy Information Administration (EIA), is surging back into the market-even though prices are dropping, they are still much higher than their 2016 lows.

He concluded, “While it is painful to all concerned to undertake a price war, you can bet the lowest cost producers will be the last ones standing”.

CLc1 dropped by 7 cents to reach $48.33 a barrel, its lowest since last November.

This was expected. The U.S. rig count has steadily been trending upward. US regular gasoline retail prices are forecast to average $2.40 per gallon in 2017 and $2.44 per gallon in 2018. The yield on 10-year Treasuries dropped, although it remained above 2.6 percent. Activity in the Permian basin gained impetus in recent times.

“However, the key to market performance this week is the response to the US lift in rates”. “For the market to establish the fact that it has finally hit bottom, we really have to get the price of oil back above $50 a barrel, which is still a tall order at this point”.

Things do not look too promising for oil prices right now. Investors have been focusing on inventory data after OPEC said its cuts aimed to stabilize prices and draw down global stockpiles.

The Organization of the Petroleum Exporting Countries (OPEC) pledged to curb production by about 1.2 million bpd from January 1, the first cut in eight years, in a move created to boost prices and drain a supply glut. Russian Federation and 10 other non-OPEC producers also agreed to production cuts. These pacts were formed for six months (read: Top ETF Stories of the Fourth Quarter).

Oil prices were put under further pressure at the end of last week, when energy services firm Baker Hughes reported USA drillers added oil rigs for the eight consecutive week. Russia, the world’s biggest producer, had only cut its output from the agreed baseline by 100,000 barrels a day through February, in contrast to the 300,000 pledged. Output there has climbed 4.5% since the OPEC-Russia deal was signed in early December. Commodities have been stumbling for the last 8 months, according to a recent commodity index, the performance of raw materials was dwindling down by 3% last week, making it the biggest decline ever since last July.

Oil held losses below $49 a barrel before United States government data forecast to show record crude inventories expanded further.

So, there are less chances of oil prices outperforming this level.

Direxion Daily S&P Oil & Gas Exp.

Traders seized the opportunity to profit from the deepening rout in oil prices using exchange traded funds.