“The divergence is a reflection of rising supplies in the U.S. at a time when the oil market looks rather tight pretty much everywhere else. U.S. shale continues to expand at a torrid pace, up around 400,000 bpd since the end of 2017. The rig count has exploded, as most shale companies believe they can make money with WTI north of $60,” according to OilPrice.com.
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Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins – some say it is now profitable at less than $50 per barrel. Additionally, companies are finding easy access to credit and private-equity firms have bought out struggling companies, which have kept production flowing.
“The global oil market looks bullish at time when the bulk of new supply is overwhelmingly concentrated in the United States. These differences in market conditions in the U.S. relative to the rest of the world are reflected in the widening price differential between WTI and Brent,” reports OilPrice.com.
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