The decline in crude oil prices on Wednesday and Thursday should not be a surprise since data from the vegetable oils markets has often forecast demand and pricing in the market, said Erik Norland, a senior economist for the CME Group, a Chicago-based derivatives marketplace.

With the consistent build up of inventory, the 5% drop off in crude oil prices to the lowest level so far in 2017, is not unexpected since inventories of oil in the U.S. have risen by 7.5% year over year, said Norland who has been bearish on crude oil prices for awhile.

The increased pace of U.S. production has made high prices difficult to sustain and could have sparked the selloff, leading prices to fall to $50 a barrel, he said. Since the end of July, production in the U.S. ramped up to 660,000 barrels per day.

"The U.S. inventory as colossally large as the number of rig counts have exploded," Norland said. "With more months of strong growth in output, producers could add another 300,000 to 400,000 barrels per day, canceling out a large portion of the 1.5 million barrels that OPEC intended to cut."

The unprecedented growth in production by shale producers since 2012 has pushed up inventories to extremely high levels, increasing the existing glut. The Energy Information Administration said this week that U.S. production will increase by 10% compared to the current levels or 10 million barrels a day by the end of next year.

Even Harold Hamm, the CEO of Continental Resources, a large shale producer and an informal advisor to President Trump on energy issues, warned Wednesday that U.S. producers could in fact "kill" the oil market if it continues to produce oil at its current rate. At a Houston conference of oil executives, CERAWeek by IHS Markit, he said that production "could go pretty high" and cautioned that drilling needs to be "done in a measured way or else we kill the market."

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