Oil prices could slide back into the $30s per barrel before the sell-off ends and prices stabilize, analysts said, bringing pain to both OPEC and its archrival — the U.S. shale industry
West Texas Intermediate oil futures for July were trading around $43 per barrel Tuesday, and Brent futures were just above $45. One catalyst for the decline was a report that Libyan oil production has returned to close to 900,000 barrels a day, its highest level in four years. Growing U.S. production and stubbornly high inventories have been another driver of lower prices.
"I don't think we're in the zone where people are ready to call this a sustainable number, but they're going to be a little bit nervous and wondering if this is an official double dip," said Dan Pickering, president of Tudor, Pickering, Holt. "It feels like the market is sending a message to the U.S. to stop, and until the U.S. gets that message, I don't know if there's going to be a change."
West Texas Intermediate futures have now fallen into a bear market — down more than 20 percent from the high of $55.34 on Jan. 3. U.S. shale production has been increasing, and at 9.3 million barrels a day, it's just 300,000 barrels a day shy of its 2015 peak.