Global oil prices extended declines Wednesday and the global benchmark, Brent crude from the North Sea, fell below $50 a barrel, hitting levels last seen late last year when OPEC agreed to its first production cut in nearly a decade. The Energy Information Agency report Wednesday showing a 5 million barrel addition to U.S. stockpiles in the latest week added pressure to the selloff.
WTI futures for May delivery fell 2% to at $47.27 per barrel, extending a slide that intensified Tuesday after the American Petroleum Institute said oil stockpiles rose by a larger-than-expected 4.5 million barrels to 533.6 million barrels, thanks in part to a surge in shale production.
Brent crude contracts, the global benchmark for pricing, fell more than 2% to $49.71, the lowest since Nov. 30 -- the day that OPEC members agreed to trim output by 1.2 million barrels per day alongside a similar 600,000 commitment from non-cartel members including Russia that was agreed shortly after.
Wednesday's declines were also partly driven by a modest rebound in the U.S. dollar, which rose by 0.12% against a basket of global currencies to trade at 99.60 after testing year-to-date lows in Tuesday trading amid triple-digit losses for the Dow Jones Industrial Average.
Current crude prices reflect the ongoing production fight between OPEC and shale drillers in the U.S.
While it is always hard to pin down OPEC production with clarity, industry experts acknowledge that the cartel's November 2016 announce production cuts seem to be reducing their crude on the market, but U.S. drillers operating in the Permian Basin are raising production at the same time.
The supply build and price drop that result from increased U.S. production has a downside, though. If prices fall too much, banks that lend to U.S. and other drillers my ease back on their lending to drillers, which would slow their production,