Increased U.S. Output Bolsters Oil Glut Fears Sending Prices Back Down
Oil resumed its decline after the biggest gain since June 2012 as U.S. crude production increased, adding to signs that the global supply glut that has pushed prices to a 5 1/2-year low will persist.
West Texas Intermediate futures dropped as much as 2.7 percent in New York. U.S. output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy Information Administration reported yesterday. The Swiss National Bank gave up its minimum exchange rate against the euro, a policy that was intended to shield its economy from the region’s sovereign debt crisis.
Crude slid almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted cuts to output amid the U.S. shale boom, exacerbating a surplus estimated by Kuwait at 1.8 million barrels a day.
Oil is leading this week’s slide in commodities after a decade-long bull market led companies to boost production and a stronger dollar diminished their allure to investors. The Bloomberg Commodity Index of 22 energy, agriculture and metal products declined yesterday to the lowest level since 2002, extending a 17 percent loss last year. OPEC will release its monthly report later today.
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