But the 5 percent drop is attributed mainly to ongoing U.S. shale builds.
Did a meeting between the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale producers result Wednesday play a role in a 5 percent-plus price drop for West Texas Intermediate?
That's the question being asked in the wake of WTI falling to a nearly three month low, which John Kilduff, founding partner of Again Capital says puts oil on a path to test the December low of $49.95 per barrel.
Most observers say the drop was caused by new Energy Information Administration (EIA) data showing that U.S. stockpiles increased to yet another record high of 8.2 million barrels more than the previous week; it also showed production continuing to increase toward 9.1 million barrels per day (bpd), the highest level in more than a year.
Osmar Abib, managing director, Credit Suisse
As long as oil is in a reasonable range, we don't care about day to day movements
Kilduff points out that a perfect storm is forming that could cause crude to trade below the three month range of between $49.61 and $55.24, with a downside target of $42: they are reduced U.S. refinery activity due to seasonal maintenance; Khalid al-Falih, energy minister for Saudi Arabia, stating earlier this week that his kingdom will support the OPEC production cutbacks only for a "restricted period of time"; and a lack of cohesion among OPEC members that has done as much if not more as the uptick in U.S. drilling to cause market imbalance.
Al-Falih made his comments during CERAWeek in Houston, which also saw Jabbar Ali Al-Luiebi, minister of oil for Iraq, state that Baghdad could increase its output capacity to 5 million bpd by the second half of 2017.
A Reasonable Range
Osmar Abib, managing director of Credit Suisse, told CNBC that "as long as oil is in a reasonable range, we don't care about day to day movements," and he added that $50 is a good price "as long as it stays in a band."
Brian Stutland, managing member, Equity Armor Investments
I heard rumours that the OPEC secretary met with a whole bunch of U.S. oil producers in Houston last night
While it seems certain that these conditions caused Wednesday's WTI drop, the tumultuous nature of the OPEC cutbacks, in which statements about their efficacy and possible future are routinely made and then recanted, leaves the door open for conspiracy theories that don't seem as farfetched as one might think.
Such was the case during a CNBC Futures Now video segment in which Brian Stutland, managing member, Equity Armor Investments, mentioned while discussing oil's plunge that "I heard rumours that the OPEC secretary met with a whole bunch of U.S. oil producers in Houston last night and [discussed] how we control prices and how we can keep them above this $50 mark."
To which Futures Now host Jackie DeAngelis added, "I did hear [that] late in the evening they all got together, you had all the big players in Houston talking about where do we go from here.
"And there really wasn't much of a consensus."
Earlier at CERAWeek, al-Falih did an about-face and told delegates that he was worried about oil inventories not draining as quickly as expected despite OPEC's highly-touted cutbacks.