Crude oil mounted a stunning decline in the closing months of 2018 as global growth concerns weighed on demand prospects and supply was bolstered by the shale boom in the United States. At the start of October, West Texas Intermediate (WTI) crude traded at levels near four-year highs. In the weeks following, the commodity plummeted nearly 40 percent. Despite an incredibly painful quarter for crude, the outlook remains bleak.
Crude Production Remains Robust
The US shale boom in the Permian Basin has seen global supply surge. Further, the United States is now the world’s top crude producer and a net-exporter of oil for the first time since 1973 according to federal data. Massive production flows have resulted in ample inventory and a consistent downward pressure on the price of the West Texas blend.
--- Written by Peter Hanks, Junior Analyst