US oil prices closed below $50 a barrel for the first time in three months on Thursday amid worries about increased American shale production in the wake of ramped-up capital investment.
US benchmark West Texas Intermediate for April delivery, slid $1 to $49.28 a barrel, its first close under $50 since December 7.
That drop followed a decline of more than five percent Wednesday after an oil inventory report showed US stocks rose by eight million barrels, on higher domestic production and increased stockpiling at the closely-watched Cushing, Oklahoma trading hub.
“The sell-off is continuing in light of a significant increase in inventories yesterday,” said Andy Lipow of Houston consultancy Lipow Oil Associates.
The pullback comes during a major energy industry conference in Houston that has featured commentary about increased investment in the industry following the recovery in oil prices since an OPEC agreement struck in November.
Analysts pointed to comments from leading shale producer Harold Hamm, chief executive of Continental Resources, who was quoted in news reports as saying higher US oil output could “kill the market.”
The US Energy Information Administration projected US oil output would rise to 9.7 million barrels per day in 2018 from 8.9 million in 2016, according its monthly report released Tuesday.