Oil prices fell 6.3 percent last week, slipping to levels last seen before OPEC’s deal to curb production, as the shale revival appears to be making the group’s cuts ineffective.
Oil prices closed near $46 a barrel in New York last week, back to levels last seen before the OPEC deal, as the shale revival appears to be making the group’s cuts ineffective.
After dipping below $44 Friday, futures pared the week’s decline to 6.3 percent. But, prices remain near their lowest since the Organization of Petroleum Exporting Countries signed a six-month deal to curb production in November.
OPEC’s curbs drove oil above $55 at the start of the year, encouraging U.S. producers to ramp up drilling. The result has been an 11-week expansion of American production by shale drillers, the longest run of gains since 2012.
Prices are still more than 50 percent below their peak in 2014, when surging shale output triggered crude’s biggest collapse in a generation and left rival producers such as Saudi Arabia scrambling to protect market share.
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West Texas Intermediate for June delivery settled at $46.22 a barrel Friday on the New York Mercantile Exchange.
Oil’s retreat has stoked declines in other commodities from iron ore to industrial metals. The deterioration in sentiment also carried through to the currency market.
The sell-off was also due to “broad macro concerns regarding the Chinese economy. The entire commodity space was weaker,” said Michael Tran, a commodities strategist at RBC Capital Markets in New York.
While OPEC is likely to prolong curbs for a further six months, American shale supply remains a concern, according to Nigeria’s oil minister.
The U.S. oil rig count has more than doubled from a year ago to 703 last week, according to data from Baker Hughes.
Nationwide crude production rose to 9.29 million barrels a day in the last week of April,…