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Booming U.S. shale production sends oil into bear market territory despite OPEC efforts

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Investing.com - Oil prices recovered slightly on Thursday morning, after falling to their lowest level in around ten months a day earlier amid lingering concerns over strong shale output growth in the U.S.

 

U.S. crude was at $42.89 a barrel in New York trade, up 36 cents, or around 0.9%, after touching its lowest since August 11 at $42.05 in the prior session.

Brent oil tacked on 52 cents to $45.34 a barrel. The global benchmark hit $44.35 on Wednesday, a level not seen since November 14.

Since peaking in late February, oil has dropped around 20%, meeting the technical definition of a bear market.

Crude prices have been under pressure in recent weeks as concerns over a steady increase in U.S. production added to fears over a glut in the market.

U.S. drillers last week added rigs for the 22nd week in a row, according to data from energy services company Baker Hughes, implying that further gains in domestic production are ahead.

According to the U.S. Energy Information Administration, domestic output climbed by 20,000 barrels to 9.35 million barrels a day last week, almost 8% higher than the same period last year.

The increase in U.S. drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market.

Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

So far, the production-cut agreement has had little impact on global inventory levels, prompting market analysts to downgrade their oil price forecast for this year to as low as $20.

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