Brent futures went down 0.8 percent at $54.6 barrel per day (bbl) as West Texas Intermediate; WTI crude was down 1.2 percent at $51.57/bbl.
This is even as the Energy Information Administration, EIA’s forecast that U.S. crude oil production will rise to 9 million bbl this year with another 500,000 bbl increase in 2018.
FXTM Research Analyst Lukman Otunuga, said WTI Crude was exposed to further losses on Wednesday after the shocking increase in United State fuel inventories and decline in Chinese demand revived concerns of the excessive oversupply in the global markets.
Otunuga noted that, the resurgence of U.S shale production could undermine the efforts of Organisation of the Petroleum Exporting Countries, OPEC, and Non-OPEC members in mitigating the global oversupply consequently leaving oil prices vulnerable.
“There is a threat of the OPEC production cut deal falling apart in the future if U.S shale continues to pump incessantly’’.
Although oil prices were initially buoyed by the optimism over OPEC and Non-OPEC members achieving roughly 82 percent compliance with its production cut, the big elephant in the room known as U.S shale should limit upside gains.
“The breakdown below $52 on WTI could spark a further selloff lower towards $51.”