Front-month WTI futures—the US crude benchmark price—briefly fell below $43 per barrel on 21 June before recovering to around $44/b later in the month. That’s an almost $10/b-drop from a year-earlier.
Bearish market sentiment from speculators—due to fears that commitment to the Opec-non-Opec production cuts may waiver—may account for some of the pressure on prices.
But the real culprit is US shale. The rig count has been on a tear, rising every week for the last six months. And a flood of crude is following. US tight oil output looks set to rise by around 1m barrels per day by the end of this year (compared to the year-earlier level) exceeding nearly all expectations at the start of the year.
