Oil prices slumped below $US45 a barrel — levels last seen in November 2016 when key OPEC producers agreed on production cuts.
Concerns of a supply glut, thanks to soaring U.S. oil production, appears to have more than negated moves by OPEC members and 11 other large producers to cut output by almost 1.2 million barrels per day during the first half of 2017.
A short while ago, West Texas Intermediate oil was 2.8% lower at $US44.26 adding to the 4.8% loss on Thursday. It has dropped 17% since April 11.
The price slump also dragged down company shares with BHP Billiton and Woodside Petroleum falling more than 3%. BHP, the world’s largest miner, is facing a double whammy of lower oil and iron ore prices. Its shares dropped to the lowest level since November last year.
Crude prices had rallied from under $US30 a barrel in early 2016 to past $US50 after OPEC agreed to the cuts last year.
While OPEC members have curtailed production, U.S. crude output has risen to the highest level since August 2015 as shale drillers added rigs every week.
U.S. crude output rose by 28,000 barrels a day last week for the longest run of gains since 2012, according to Energy Information Administration data.
OPEC members will meet May 25 in Vienna to make a decision on whether to extend the productions to suck out the excess oil from the market. Russia is said to support prolonging the curbs.