Is the new rout in oil getting worrying?

Earlier this morning, the New York Mercantile Exchange was quoting delivery for light sweet crude in July at $43.30. That’s a far cry from the $55 average that analysts had expected for 2017 as recently as last month. And all indications are that this price deflation is not transitory, but lasting. The selloff in oil brings year-to-date losses to some 23% despite OPEC’s extended production cut agreement. The market seems to be indicating that OPEC has lost control of the oil market because of increased production elsewhere. To wit, rig counts in the US have climbed for 22 weeks on the trot. And many look at these rig counts as a proxy for future production. Worries. The immediate concern is that this rout in oil prices will be negative for capital expenditure and presage another round of b...

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