Even with more oil potentially coming from Iran and even Libya, the world's largest oil producers continue to flood the world with cheap crude, making the bottoming process for oil prices even more elusive.
None of the big three—Saudi Arabia, Russia and the U.S.—have significantly lowered actual production, and analysts say the breakdown of oil prices could continue for as long as another month or two.
The drop in U.S. production last week—to 9.38 million barrels a day from 9.44 million the week earlier—is one of the few declines reported since U.S. production crossed the 9 million barrels-a-day mark in November and a sign that the shutdown of about half of U.S. rigs may be taking some toll on production.
U.S. crude inventories also rose last week to record levels for a 12th week in a row, while gasoline stocks dropped much more than expected amid a surprise jump in demand.
One factor that could come into play for the oil market is the storage level at Cushing, Oklahoma, the physical storage hub for Nymex futures.
Analysts have been watching U.S. storage capacity for signs that it is nearing a top for fear that could trigger panic selling. Cushing storage has been building steadily and is more than three-quarters full. Stocks there rose another 2.8 million barrels again last week to 58.9 million barrels, a record.
Pressure could be alleviated on Cushing once refineries return to a higher production levels, after spring maintenance.
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"This crude phenomena is going to continue for a few weeks. We don't have the refinery utilization over 90 percent. That has to get to 90-91 to stop this incessant building of crude inventories," said John Kilduff of Again Capital. Refineries are currently running at about 89 percent.
Kilduff said the pressure could build on WTI around the time its May futures contract expires in the third week of April. "The May expiration will be the one that get the most pressure from the inventories," he said.
Kilduff expected oil to find a bottom in the high $30s per barrel, above his prior estimate in the low $30s. Some estimates are as low as the $20s for an oil bottom, and some analysts, like Haywood, believe the bottom is already set.
"I think the $42 level is proving to be resilient. You do see a lot of bargain hunters coming in. They'll be buying again because of perceived value," Kilduff said.
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Barclays analysts, in a note, said they expect the second quarter to be the weakest time of year for oil prices.
"We expect the support to oil from temporary factors to fade away in Q2, and that a massive U.S. crude oil stock build will find its way back to the global market in the form of products in the months ahead," Barclays analysts wrote. "Middle East geopolitics muddy the picture a little and, should tensions rise (e.g., in Yemen), the risk premium could support prices at higher levels than we expect. Each factor could tilt the market up or back down from current levels and we maintain that the risks remain skewed toward the downside."
Andrew Lipow, president of Lipow Oil Associates, says he believes there's enough U.S. storage and the bottom in prices will come more from producers such as Iran and Libya putting oil back on the market.
But U.S. production should come into play, as it could begin to slow down later in the year, affecting world supplies.
"You might need $50 WTI to flatten out U.S. production growth, and that might require something like a 50 percent rig count cut, and that's sort of what's playing out," said Citigroup energy analyst Eric Lee recently. "If you hold at these levels, you can start to see a flattening out of production growth at least on the shale side of things, from late in the second quarter."
The drop in oil prices is burning major producers but OPEC shows no signs of blinking, and analysts say it is the shale producers that are cutting back first.
The U.S. Energy Information Administration said on Wednesday that OPEC members, excluding Iran, earned $730 billion in net oil export revenues in 2014, an 11 percent decline from the year earlier. That was the lowest for the OPEC since 2010.