Domestic oil prices plunged below $50 a barrel on Thursday for the first time this year as the market worried that growing U.S. crude producers may undermine efforts to rebalance global supply and demand, according to Bloomberg MarketWatch. It marked their lowest finish since late November.
April West Texas Intermediate crude slid $1 or 2%, to settle at $49.28 a barrel on the New York Mercantile Exchange.
May Brent crude, the global benchmark, lost 92 cents, or 1.7%, to end trading at $52.19 a barrel on the London ICE Futures Exchange.
Many analysts attributed Wednesday’s 5.4% dive to an 8.2 million-barrel increase in U.S. crude stocks to a record level. It also marked the ninth consecutive weekly climb reported by the Energy Information Administration, which also revealed a rise in weekly domestic production to their highest level in more than a year.
“It has obviously never been the intention of [OPEC] to support the American oil industry, as this would reduce the impact of the lower OPEC production rate, and it’s now less likely the OPEC members will continue to honor the deal,” said analysts at Secular Investor, in a research note issued Thursday.
Senior Saudi energy officials told top independent U.S. oil firms this week that they should not assume OPEC will extend their production cuts to offset output growth from U.S. shale fields, according to a report issued by Reuters on Thursday.
Back on the New York Mercantile Exchange, April natural gas climbed 7.3 cents, or 2.5%, to settle at $2.974 per million British thermal units. On Thursday, the EIA reported that supplies of the commodity fell 68 billion cubic feet last week, larger than the 58 billion decline expected by analysts polled by S&P Global Platts. The data included a “reclassification” of stocks.