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Crude Oil Stocks Set Record

Crude oil inventories jumped to a new record last week, according to the Energy Information Administration (EIA), causing prices on the futures market to decline. Since the beginning of 2017, inventories have increased 10 out of 11 weeks.

Oil inventories in the U.S. rose 50 million barrels to 533,110 million barrels since the first week in January, according to EIA’s report issued on March 22. Crude oil inventories at the Cushing, Oklahoma, delivery hub for U.S. crude futures rose 1.4 million barrels, the EIA said.

Prices on the New York Mercantile Exchange dropped to around $47 in response to the news.

Speculators attributed the rise in stock to an increase in U.S. oil production and a rise in oil imports. However, worldwide supplies appear to be smaller than they were a year ago, while demand is picking up. Production from OPEC members has declined since January. Demand in two key countries – China and India – increased in February.

Declining oil production and increased demand on the international markets appear to have softened the blow to crude oil prices in the U.S. Brent crude, which is traded in London, closed above $50 a barrel for the first time since November 30, closing at $50.64 per barrel on March 22. Refinery runs rose 329,000 barrels per day as utilization rates jumped 2.3 percentage points to 87.4% of capacity, led by higher runs at Gulf Coast and Midwest refiners. Gasoline stocks fell 2.8 million barrels, compared with analysts’ expectations for a 2 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 1.4 million-barrel drop, according to EIA data.

Alex Mills is President of the Texas Alliance of Energy Producers.  The opinions expressed are solely of the author.

Oil prices finished slightly higher Friday, but logged their third weekly loss in a month.

5 key signatories to the OPEC output deal meet in Kuwait on Sunday

Reuters
Comments from Saudi Arabia are giving oil prices a bump higher on Friday
By

MyraP. Saefong

Markets/commodities reporter

SaraSjolin

Markets reporter

Oil prices finished slightly higher Friday, but logged their third weekly loss in a month.

Traders continued to weigh signs of OPEC-led cutbacks in global crude production ahead of a meeting of oil producers this weekend, against data pointing to the likelihood of further gains in U.S. output.

May West Texas Intermediate crude CLK7, +0.92%  rose 27 cents, or 0.6%, to settle at $47.97 a barrel on the New York Mercantile Exchange. It touched intraday highs above $48 early Friday following news that Saudi Arabia said it cut oil exports to the U.S. in March by around 300,000 barrels a day.

For the week, May WTI oil futures saw a loss of about 1.7% from the week-ago settlement of $48.78 for the April contract, which was the front month at the time. The May contract itself lost 2.7% for the week, according to FactSet data.

May Brent crude LCOK7, +0.81%  added 24 cents, or 0.5%, to $50.80 a barrel—for a weekly loss of about 1.9%.

For the session, “oil managed to rebound not because of an uptick in buyer interest, but because of book-squaring into this weekend’s OPEC gathering,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch.

Five representatives of the countries that signed up to the output agreement—Kuwait, Algeria, Venezuela, and non-OPEC nations Russia and Oman—will meet in Kuwait on Sunday to review the current level of compliance. Most members of the Organization of the Petroleum Exporting Countries are adhering to their pledges to make cuts, but data suggest not all non-OPEC producers are sticking to their quotas.

If OPEC says ‘something crazy while electronic markets are closed between now and Sunday night, it could cause futures to gap higher at next week’s open.’

Tyler Richey, Sevens Report

“There is no question that OPEC is losing its grip on the market, but if they say something crazy while electronic markets are closed between now and Sunday night, it could cause futures to gap higher at next week’s open,” Richey said.

But then there’s the U.S., which isn’t part of the agreement.

“OPEC has done their part, but U.S. inventory data is still rising, keeping the lid on the oil price,” said Naeem Aslam, chief market analyst at Think Markets.

Data on the number of active U.S. oil rigs from Baker Hughes BHI, -0.29%  released Friday revealed a rise of 21 to 652 rigs this week—suggesting the likelihood of a rise in domestic production to come. The oil rig count has climbed every week this year so far, except for one.

Oil prices have been under pressure for most of the week, as U.S. stockpiles hit a record, based on weekly data from the EIA going back to 1982.

Read: Past oil spending could make for glut next year: Goldman Sachs

Also see: Explaining why some say Keystone will create thousands of jobs, and others say 35

Elsewhere in the energy spectrum, gasoline for April RBJ7, +1.34%  settled up 1% at $1.605 a gallon, to end the week up 0.4%, while April heating oil HOJ7, +1.12%  added 0.5% at $1.498 a gallon, down about 0.7% for the week.

Read: Gasoline prices notch smallest price move in 8 years

Natural gas for April NGJ17, +0.98%  added 0.8% to $3.076 per million British thermal units—settling about 3.4% higher for the week.

Oil settles at $48.04

CNBC

Reuters

Oil settles at $48.04, down 20 cents, as US crude stockpiles swell

Oil

Lucy Nicholson | Reuters

Oil prices recouped much of their losses after sliding to almost four-month lows on Wednesday after data showed U.S. crude inventories rising faster than expected, piling pressure on OPEC to extend output cuts beyond June.

The U.S. Energy Information Administration (EIA) said U.S. inventories climbed by almost 5 million barrels to 533.1 million last week, far outpacing forecasts for an increase of 2.8 million.

“A persistent increase in U.S. oil production, together with a rise in imports from Canada, contributed towards a large build in crude oil inventories,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

“The market remains nervous about rising U.S. production, which is also reducing the effectiveness of output cuts by the OPEC and some non-OPEC countries,” Kumar added.

A close look at close oil sentiment

A close look at close oil sentiment   

Global benchmark Brent crude futures for May delivery were down 31 cents at $50.65 a barrel by 2:33 p.m. EDT (1833 GMT). The contract fell as low as $49.71.

On its first day as the front-month, U.S. West Texas Intermediate (WTI) crude futures for May settled 20 cents lower at $48.04 per barrel. The session low was $47.01.

Both benchmarks hit their lowest since Nov. 30 when OPEC countries agreed to cut output, and both remained in technically oversold territory. WTI was oversold for the third day in a row, Brent for the second.

A deal between the Organization of the Petroleum Exporting Countries and some non-OPEC producers to reduce output by 1.8 million barrels per day (bpd) in the first half of 2017 has done little to reduce bulging global oil stockpiles.

OPEC, which sources say is leaning toward extending cuts, has broadly delivered on pledged reductions, but non-OPEC states have yet to cut fully in line with commitments.

Trader sees oil reversing course for a rally

Trader sees oil reversing course for a rally   

“OPEC has used up most of its arsenal of verbal weapons to support the market. One hundred percent compliance by all is the only tool they have left and on that account they are struggling,” said Ole Hansen, head of commodity strategy at Saxo Bank.

U.S. shale oil producers have been adding rigs, boosting the country’s weekly oil production to about 9.1 million bpd for the week ended March 10 from an average 8.9 million bpd for 2016, according to U.S. data.

“OPEC’s market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience,” U.S. bank Jefferies said in a note.

But the bank said the market was undersupplied and, if OPEC extended cuts into the second half, inventories would draw down and prices recover above $60 in the fourth quarter.

However, it said U.S. crude production was expected to grow by 360,000 bpd in 2017 and 1 million bpd in 2018, and a price recovery could spur more U.S. shale activity.

Oil ends lower as April contracts expire ahead of U.S. crude-supply data

MARKET WATCH

Trades look for hints on potential for OPEC output cut extension

Shutterstock/zhengzaishuru

By

MyraP. Saefong

Markets/commodities reporter

RachelKoning Beals

News editor

Oil prices settled lower Tuesday in volatile trading tied to the expiration of the April futures contracts, ahead of data expected to reveal a rise in weekly U.S. crude supplies.

Traders also kept an eye out for hints on whether the Organization of the Petroleum Exporting Countries will extend the production-cut agreement between its members and other major producers beyond June. OPEC sources have indicated that members increasingly favor an extension but want the backing of non-OPEC oil producers, which have yet to deliver fully on existing cuts.

April West Texas Intermediate crude CLJ7, -1.49% declined by 88 cents, or 1.8%, to settle at $47.34 a barrel on the New York Mercantile Exchange. The contract, which expired at the settlement, finish at their lowest level since November, according to FactSet data. May WTI CLK7, -0.58% which is now the front-month contract, shed 67 cents, or 1.4%, to finish at $48.24 a barrel.

May Brent crude LCOK7, -0.51% lost 66 cents, or 1.3%, to $50.96 a barrel on the ICE Futures exchange in London.

“WTI crude oil was unable to hold on to early gains despite a falling U.S. dollar providing support to commodity prices in general,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.

“Given the high volatility and big surprises in both directions of the last three weeks, it appears some traders may be going to the sidelines ahead of the [supply data] news, while others may be expecting a big build after last week’s surprise decline,” he said.

Petroleum inventory data are due out from the American Petroleum Institute late Tuesday and Energy Information Administration early Wednesday. Analysts surveyed by S&P Global Platts forecast a climb of 2 million barrels in crude inventories for the week ended March 17.

“A lot of the recent volatility in oil has been around traders trying to figure out if the big build we saw in U.S. inventories in the winter is over or not,” said Cieszynski. EIA data released last week showed the first decline in crude stockpiles in 10 weeks.

The world’s biggest crude exporter is conceding ground to shale producers in the U.S., people familiar with current Saudi policy said. Saudi Arabia’s crude exports to the U.S. for the week ended March 10 fell by 426,000 barrels a day compared with the previous week, according to U.S. data.

Elsewhere in energy trading, April gasoline RBJ7, -0.28%  fell by 0.4% to $1.605 a gallon, while April heating oil HOJ7, -0.39%  lost 0.7% to $1.503 a gallon.

April natural gas NGJ17, -0.32%  settled at $3.093 per million British thermal units, up 1.7%.

US crude oil up 2.4%

US crude settles at $48.86, up 2.4% on stockpile drop, snapping 7-session losing streak

Futures Now: Crude oil breaks losing streak

Futures Now: Crude oil breaks losing streak   

Oil prices rose more than 2 percent Wednesday, lifted by a surprise drawdown in U.S. crude inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.

Data from the U.S. Energy Information Administration (EIA) showed U.S. crude stocks fell last week, dropping after nine consecutive increases.

Inventories fell by 237,000 barrels in the week to March 10, compared with analysts’ expectations for an increase of 3.7 million barrels.

The IEA said global inventories rose in January for the first time in six months despite OPEC output cuts, but said if it stuck to its production curbs the market should see a deficit of 500,000 barrels per day (bpd) in the first half.

“For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve,” the IEA said in its monthly report.

Futures Now: Crude oil breaks losing streak

Futures Now: Crude oil breaks losing streak   

U.S. West Texas Intermediate crude ended Wednesday’s trade up $1.14, or 2.4 percent, at $48.86, snapping a seven-session losing streak.

Brent futures were up 83 cents, or 1.6 percent, at $51.75 a barrel by 2:39 p.m. ET (1839 GMT). Prices had hit a three-month low of $50.25 during the previous day’s trading.

Prices extended gains after the U.S. Federal Reserve raised interest rates in a widely anticipated move that sent the dollar index lower. A weaker greenback makes dollar-denominated crude oil more affordable to holders of other currencies.

EIA also reported gasoline stocks fell by 3.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, were down 4.2 million barrels, versus expectations for a 1.7 million-barrel drop.

Earlier, the IEA reported global inventories rising in January for the first time in six months despite OPEC cuts since Jan. 1, but said if OPEC stuck to limits the market should see a deficit of 500,000 barrels per day (bpd) in the first half of 2017.

“As long as OPEC stays on track and non-OPEC delivers on their agreed cuts, the market will continue to balance,” said Ole Hansen, head of commodity strategy at Saxo Bank.

The Organization of the Petroleum Exporting Countries said at the end of November it would cut 1.2 million bpd during the first half of 2017, and then in December reached a deal with non-OPEC producers to cut about 600,000 bpd from their output.

Matt Smith: US inventory at record highs

Matt Smith: US oil inventories at record highs   

Despite OPEC compliance with its share of the cuts, stockpiles have continued to rise, in part because OPEC members pumped heavily before cuts kicked in and also because U.S. shale producers have raised output as Brent spiked above $58 in January.

Last week, prices plummeted more than 5 percent, the biggest drop in a year, as U.S. crude inventories surged much more than expected to a record high.

“While such patience (counseled by the IEA) may indeed benefit longer-term investors it may not be much help for money managers facing year-to-date losses on long positions, whether longer-term holdings benchmarked to the December 30 Brent closing price of $56.82 or purchased over the long period of range trading over the first ten weeks of the year,” Tim Evans, Citi Futures’ energy futures specialist, said in a note.

“Surplus inventories and rising U.S. production may be more of a worry to them.”

On Tuesday, prices had been hit hard by an OPEC report showing a rise in global crude stocks and a surprise output jump from OPEC’s biggest member, Saudi Arabia.

Secondary sources had said Saudi output fell in February to 9.797 million barrels per day (bpd), but Riyadh told OPEC it rose to 10.011 million bpd.

Saudi Arabia played down the figures, saying its supplies to the markers were effectively stable during January and February.

— CNBC’s Tom DiChristopher contributed to this report.

Weekly Outlook for Crude Oil

Crude Oil Futures – Weekly Outlook: March 13 – 17

© Reuters. Oil books a weekly loss of just over 9% amid glut concerns© Reuters. Oil books a weekly loss of just over 9% amid glut concerns

Investing.com – Oil futures settled at the lowest level since the end of November on Friday, booking a weekly loss of around 9% as concern over rising shale production and record-high U.S. crude inventories offset optimism that OPEC and its allies have been following through on their commitment to cut production.

The U.S. West Texas Intermediate crude April contract touched a session low of $48.31 a barrel on Friday, a level not seen since November 30. It was last at $48.49 by close of trade, down 88 cents, or about 1.8%.

The U.S. benchmark lost $4.84, or almost 9%, on the week, its biggest weekly drop in five months.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery slumped 82 cents, or about 1.6%, to settle at $51.37 a barrel by close of trade. The global benchmark fell to $51.14 earlier, its cheapest since November 30.

For the week, London-traded Brent futures recorded a loss of $4.53, or 8.1%, the fifth straight weekly decline.

Concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand pressured crude prices.

Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by 8 last week, the eighth weekly increase in a row. That brought the total count to 617, the most since October 2015.

Meanwhile, the U.S. Energy Information Administration said on Wednesday that crude supplies jumped by 8.2 million barrels last week to yet another all-time high of 528.4 million. It was the ninth straight weekly build in U.S. stockpiles, feeding concerns about a global glut.

Oil prices have been trading in a narrow $5 range around the low-to-mid-$50s over the past three months as sentiment in oil markets has been torn between rising stockpiles and increased shale production in the U.S. and hopes that oversupply may be curbed by output cuts announced by major global producers.

OPEC and non-OPEC countries made a strong start to lowering their oil output by almost 1.8 million barrels per day by the end of June, but so far the move has had little impact on inventory levels.

Kuwait is scheduled to host a ministerial meeting on March 26 comprising both OPEC and non-OPEC members to review compliance with the output agreement and to discuss whether cuts would be extended beyond June.

Elsewhere on Nymex, gasoline futures for April shed 2.4 cents, or about 1.5% to $1.600 on Friday. It ended down about 3.2% for the week.

April heating oil inched down 2.5 cents, or 1.7%, to finish at $1.503 a gallon, the lowest since November 30. For the week, the fuel lost roughly 5.7%.

Natural gas futures for April delivery rose 3.4 cents, or almost 1.2%, to $3.008 per million British thermal units. It posted a weekly gain of 6.4%.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Meanwhile, investors will keep an eye out for monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency to gauge global supply and demand levels.

Traders will also continue to pay close attention to comments from global oil producers for further evidence that they are complying with their agreement to reduce output this year.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, March 14

The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.

Later in the day, the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, March 15

The International Energy Agency will release its monthly report on global oil supply and demand.

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

Thursday, March 16

The U.S. government is to produce a weekly report on natural gas supplies in storage.

Friday, March 17

Baker Hughes will release weekly data on the U.S. oil rig count.

Good News for Stocks

Crude oil’s plunge could actually be good news for stocks

If oil keeps plunging, can stocks keep holding up?

If oil keeps plunging, can stocks keep holding up?   

The recent weakness in crude oil could prove to be a positive for equities, according to one chart-minded strategist.

WTI crude remained below $50 per barrel early Friday, already having slipped nearly 6 percent this week, but stocks were steady as the S&P 500 and Dow Jones industrial average were in the green. Crude oil supply in the U.S. has reached record highs, fueling some doubts about OPEC-led agreements to curb production.

Before the November production agreement, low oil prices were considered a bearish sign for stocks. Now, however, Oppenheimer technical analyst Ari Wald said he’s not concerned about sinking crude oil prices’ effects on equities.

“In fact, I think for the long run this could be quite positive,” he said.

In looking historically at crude oil’s 52-week rate of change, Wald found that the worst forward performance in the S&P 500 occurred when the price of crude oil was higher per barrel. A high rate of change for oil is a proxy for an “economic boom,” Wald said Thursday.

“Overall, stocks ex-those tied to oil prices, should continue to do well as long as oil prices are low and stable, and avoid a steep run-up,” he wrote in an email.

In an interview on CNBC’s “Trading Nation” Wald said that if anything, the recent downturn in crude has removed a potential headwind for stocks not directly tied to oil prices.

Oil could continue to weaken, given the likelihood of a Federal Reserve interest rate hike, which could strengthen the U.S. dollar and slow economic growth, said 55 Capital Partners strategist Max Wolff.

“Both are bad for oil,” as well as for stocks, Wolff said. “We see the commodity space and oil as a better economist than the markets lately.”

Historically, the S&P 500 rarely finishes higher in weeks in which crude prices have declined significantly, according to a CNBC analysis using Kensho technology.

Indeed, the S&P 500 and Dow Jones industrial average are both on pace for their worst week of 2017.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

Oil Bulls Blink After Months of Attempts to Boost Crude Prices


FILE - An oil storage tank and crude oil pipeline equipment is seen at the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016.

FILE – An oil storage tank and crude oil pipeline equipment is seen at the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016.

Oil bulls trying to push the crude market higher finally waved the white flag Wednesday, triggering the biggest rout in a year on concerns that stubbornly high inventory levels would persist despite supply cuts.

Prices had been locked in the tightest trading range in over a decade as traders and speculators piled into bets that oil prices would rise after the world’s top producers cut output.

For weeks, they shrugged off record high inventories in the United States until Wednesday, when the market finally blinked.

Global oil benchmark, Brent and U.S. crude’s West Texas Intermediate prices plunged more than 5 percent — the biggest drop since February 2016 — an unwelcome reminder of the darkest days of a two-year price war that left many U.S. shale producers with beleaguered balance sheets.

The move also lifted trading volumes to the highest since early December, with over 430,000 contracts in Brent crude for May delivery and more than 911,000 contracts of WTI for delivery in April changing hands.

The selloff continued Thursday, as U.S. crude hit a low of $48.79 a barrel in early trading, its first drop below $50 all year, while Brent crude touched a low of $51.60 a barrel, its lowest since Dec. 1.

Industry players were divided on whether the price slide would continue or be short lived, given producers’ adherence to a pledge to rein in output and prop up prices that have languished for over two years owing to a glut.

“The high level of uncertainty that has kept the oil complex trading in a relatively narrow trading range since late last year has been replaced, at least for the moment, by a bearish market sentiment,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

“The discussion will now center around whether or not Saudi Arabia is willing to give back market share to U.S. producers … or are they ready for yet another round of the market share war.”

So far, there has been no indication that Saudi and OPEC would extend the cuts beyond what is announced or allow the U.S. to claw some of its market share.

Suhail bin Mohammed al-Mazrouei, energy minister for the United Arab Emirates, told Reuters on the sidelines of an industry conference in Houston that the plunge in oil prices was temporary and prices would rise as OPEC complies with output cuts.

Still, the rise in inventories was “a worry,” he admitted.

Despite record exports in U.S. crude oil, inventories have ballooned to a new high week after week, threatening a speedy rebalancing of the market.

Saudi Oil Minister Khalid al-Falih even admitted on Tuesday inventory drawdowns were taking longer than he had expected for the first two months of the year.

The crash Wednesday also tested key technical levels of support established this year and dropped below their 100-day moving averages — a key metric for chart watchers — for the first time since the OPEC deal was announced.

“The move down is in oversold territory, but otherwise, there is very little evidence that it will end,” Dean Rogers, senior analyst at Kase & Company, said of WTI.

A small upward correction might take place first, but odds strongly favor a continued decline toward the next major target at $48, he said, adding that for Brent, the move lower is poised to continue to at least $52.60 and likely $51.60 and lower over the next few days.

Still, for the long term, most market participants continue to remain bullish.

Trade in options — that give the holder the right to buy or sell at a specific price — signaled that the market does not expect prices to move much lower than current levels.

“Their [OPEC’s] response may very well be a continuation of cooperation to limit their oil production, perhaps for a little longer than they had hoped and this should help keep a floor under oil prices,” said Fawad Razaqzada, technical analyst at forex.com.

“Indeed, despite today’s sharp selloff, I remain bullish on oil and still expect to see $60-$70 a barrel by the year end.”

Oil Price falls below $50

Oil price falls below $50 as U.S. supplies hit record

176 6 LINKEDIN 9 COMMENTMORE

The price of U.S. crude oil has dipped below $50 for the first time since December as a global supply glut persists despite production cuts by big exporters.

In November, the Organization of Petroleum Exporting Countries and other oil-producing nations agreed to lower their output for much of 2017 to rein in chronic oversupply and to boost prices. But drilling and stockpiles of oil have continued to rise, particularly in the U.S.

West Texas Intermediate (WTI) oil, the U.S. benchmark, fell $1.23 a barrel to $49.05 on Thursday, and is down 9% in March.

Brent crude oil, the benchmark for international oils, declined 54 cents a barrel to $52.57.

U.S. commercial crude supplies have risen for nine straight weeks, reaching a record 528.4 million barrels last week, according to the U.S. Energy Information Administration. That was an increase of 8.2 million barrels from a week earlier.

“The rising crude inventory levels in the US to new all-time highs has been the No. 1 reason why prices have been unable to move further higher,” Fawad Razaqzada, market analyst at Forex.com, wrote to investors Wednesday.

The effects of lower oil prices have reverberated through the economy. Prices at the gas pump have fallen since early January, putting more money into drivers’ pockets. The average U.S.gas price peaked this year at $2.38 on Jan. 8, but has since fallen to $2.30, according to GasBuddy.com.

As the weather warms up and more Americans hit the road for spring break and summer, prices typically rise about 60 cents a gallon from mid-February to June 1, says Patrick DeHaan, senior petroleum analyst at GasBuddy. “This year, if (the oil price) drop sticks around, we could see far less of a rally. It could be even half of that,” he said.

That same drop, however, has caused pain in other areas. Shares of oil companies have sagged in recent weeks as analysts’ cut their earnings predictions for the industry. The S&P 500 Energy Index is down 8.5% for the year. ExxonMobil’s stock opened at a 52-week low Thursday, though it rebounded later and finished up 0.8% for the day.

So far, any signs that domestic stockpiles and production could wane have been faint. The Trump administration has been vocal about its desire to remove regulations that hinder U.S. production. And that “could see a surge of domestic crude driving down prices even further,” said Alfonso Esparza, market analyst at brokerage firm OANDA.

U.S. oil output is expected to increase to an average of 9.7 million barrels per day in 2018, with more production in the Permian shale region of Texas and New Mexico, as well as the Gulf of Mexico, expected, according to the U.S. Energy Information Administration.

“U.S. crude oil production is now expected to reach an all-time high in 2018,” Howard Gruenspecht, acting administrator of the E.I.A., wrote in the agency’s March 2017 Short-Term Energy Outlook. “Rising crude oil production from non-OPEC countries, especially from the United States, is expected to curb upward pressure on oil prices for much of 2017.”

Despite the sell-off Thursday, Razaqzada, the analyst at Forex.com, said he expected oil prices to rebound to the $60 to $70 range by the end of the year.

Demand typically rises in the summer, and some analysts expect the effects of OPEC-led supply cuts, which went into effect Jan. 1, to become more noticeable later this year.

US oil price plunges toward $50

Market alert: US oil price plunges toward $50 as a perfect storm brews

Workers connect drill bits and drill collars, used to extract natural petroleum, on Endeavor Energy Resources' Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas.

Futures Now: Crude oil hits 1-month low   

Oil is on track to break through the key psychological level of $50 a barrel after a ninth straight rise in U.S. crude stockpiles came at exactly the wrong moment, analysts said Wednesday.

The amount of crude oil in U.S. storage rose to another record high on Wednesday, jumping 8.2 million barrels from the previous week, the Energy Information Administration reported. The increase was more than four times what analysts expected.

Weekly figures also showed U.S. oil production continuing to tick up toward 9.1 million barrels a day, the highest level in more than a year. That provided further evidence that rising American output is confounding efforts by the Organization of the Petroleum Exporting Countries, Russia and 10 other exporters to reduce global oil inventories by curbing their own output.

“It’s really been like a kettle boiling for the last few weeks in terms of having traded in a very tight range. There’s been this pressure building from a technical perspective.” -Matt Smith, director of commodity research, ClipperData

The data sent U.S. benchmark West Texas Intermediate crude prices plunging more than 5 percent to a nearly three-month low.

The plunge through a number of lows on Wednesday puts oil on a path to test the December low of $49.95 a barrel, said John Kilduff, founding partner at energy hedge fund Again Capital.

“From there you could accelerate,” he told CNBC, adding that $50 “was the fail-safe.” Kilduff’s downside target, once oil breaks below $50 a barrel, is $42.

For the last three months, oil has traded in a range between $49.61 and $55.24.

According to Kilduff, all the elements are in place for oil to break below its three-month range: lack of cohesion among OPEC members, bearish statements from oil ministers at CERAWeek conference by IHS Markit and subdued refinery activity as operators perform seasonal maintenance in the United States.

Bearish OPEC comments at CERAWeek

On Tuesday, Saudi Oil Minister Khalid al-Falih warned at CERAWeek that the kingdom would only support OPEC’s intervention in markets for a “restricted period of time” and would not “underwrite the investments of others at our own expense and long-term interests.”

Later that evening, oil ministers convened a last-minute press briefing, where they reaffirmed their commitment to the production cut deal.

“The Saudis almost explicitly warned that if we don’t get cooperation or we see cheating we’re not going to be someone’s patsy forever,” said Tom Kloza, global head of energy analysis at Oil Price Information Service.

Saudi Arabia has so far provided the lion’s share of output cuts as OPEC and other producers seek to remove 1.8 million barrels from the market in the first six months of 2016. Iraq, OPEC’s second largest producer, produced above its quota in January.

Saudi energy minister: We have been bearing a significant part of the load of OPEC cut

Saudi energy minister: We have been bearing a significant part of the load of OPEC cut   

Also at CERAWeek on Tuesday, Iraqi Minister of Oil Jabbar Ali Al-Luiebi said Baghdad could increase its output capacity to 5 million barrels a day by the second half of 2017, raising concerns about its commitments to production cuts.

Andy Lipow, president of Lipow Oil Associates, said $50 can now be considered a target. If oil prices break that level, market watchers can expect more talk from oil ministers about extending the OPEC agreement another six months when producers meet in May, he added.

“I think that OPEC is hoping they can wait it out so they don’t have to make a decision in May to continue with production cuts, but they may be forced into that decision given the high inventories here in the U.S.,” he said.

Those inventory builds are likely to continue through the refinery maintenance season, according to Lipow.

Kettle finally boils over

Further fueling the fall to $50 a barrel is the record number of bets traders have recently made on crude rising further, said Matt Smith, director of commodity research at shipment tracking firm ClipperData. As oil prices fall to the bottom of their range, more traders will look to unwind those positions, he explained.

“It’s really been like a kettle boiling for the last few weeks in terms of having traded in a very tight range. There’s been this pressure building form a technical perspective,” he said. “As that happens, as that pressure builds, we tend to pop violently.”

OPEC Secretary General Mohammed Barkindo (R)

OPEC secretary general on production cuts   

Kloza also sees the anniversary of crude oil storage leases playing into the problem.

Many traders took out one-year leases around this time in 2016, when crude prices were near the lows of the downturn, he explained. Now that the oil price curve is flattening — meaning prices for future crude deliveries are declining relative to current costs — traders have little incentive to sign another one-year lease. Instead they’re selling that oil into an oversupplied market.

While the next 30 days provide an environment ripe for a drop below $50 a barrel, Kloza said, he doesn’t see an “apocalyptic move lower.”

“We may break below that range for about 90 days, but in the end I think we’ll be above it come driving season,” he said. “From now through let’s say May, it may be stormy times,” he said.