Baker Hughes' weekly rig count, released on Friday, showed US energy companies added 15 new oil rigs to production last week, taking total drilling activity to its highest since March 2015. While this strategy has certainly helped the central government reinforce federal coffers, the recent increase in crude oil has made fuel more expensive than ever before.
United States oil production has surged by more than 27% in the past two years to 10.73-million barrels a day.
US crude futures fell more than $1 on Tuesday on worries that Saudi Arabia and Russian Federation will pump more crude to boost supplies after more than a year of reducing worldwide inventories.
While Russia and OPEC benefit from higher oil prices, up nearly 20 percent since the end of previous year, their voluntary output cuts have opened the door to other producers, such as the USA shale sector, to ramp up production and gain market share.
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The sharp price decline was triggered on Friday by Saudi Arabia, the biggest oil exporter in the world and de facto leader of oil cartel OPEC.
Next month's meeting of the Organization of the Petroleum Exporting Countries (OPEC) is being touted as key to the outlook for crude oil prices, but a strong indication of what's likely will come next week.
"Oil offered little to support after being hit down last week on expectations over a ramping up of output from OPEC and co.", IG market strategist Pan Jingyi said.
Oil climbed to $76 a barrel on Wednesday, supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018 and helped by forecasts US inventories fell. The price of oil is rising due to a supply problem, even of shale oil, largely produced by the U.S., which has also become one of the largest oil producing nations in the world in the past five years.
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Another player in on the global oil stage is Venezuela. US crude CLc1 was up 40 cents at $67.13.
"The current level of the market deficit, the robustness of the demand backdrop, and the rising levels of disruptions all set the stage for inventories to fall further", the analysts wrote in the May 25 report.