Although OPEC is still walking around triumphantly as members keep to their output cut commitments, American shale production has reemerged as a force to be reckoned with as evidenced by the latest bit of inventory data. This is yet another shred of proof that the global inventory glut that has built up over the last few years is still showing no signs of easing, despite the dramatic steps taken to reduce overflowing stockpiles.The latest evidence of this developments comes amid a ninth straight week of inventory additions in the United States.

With US crude oil stockpiles reaching a new record alongside continually climbing production, the same forces that brought prices to their knees in 2016 are rapidly reemerging. Furthermore, despite OPEC’s success reaching its own targets, other non-OPEC participatory nations have not upheld their end of the bargain. The final nail in the coffin however may be the demand side of the equation, especially if a pickup in purchases fails to materialize over the coming months.

Another Week, Another Disappointment

Following a consensus estimate calling for a smaller build to US oil inventories, the latest data reported by the Energy Information Administration earlier in the session smashed expectations, with stockpiles rising by 8.209 million barrels last week.Besides bringing stockpiles to a new record, the data continues to fly in the face of OPEC’s goal of killing off the glut with their collective reduction.Hurting the outlook even further is the sustained rise in US production, especially after daily output hit a 13-month high of 9.088 million barrels per day.Should Baker Hughes rig count data continue to trend higher, production may keep climbing as more producers take advantage of higher oil prices.

Adding to the more bearish outlook was the latest analysis compiled by ratings agency Fitch. According to the report, oil prices are expected to trend below January and February levels during the second half of the year.The resurgence of shale has largely offset any hope for a major drawdown in oil inventories.This reflects the increasingly popular thesis amongst market participants that US shale is gradually becoming the swing producer for the entire market, especially when considering the continued slide in breakeven costs as the industry grows leaner.However, more concerning is Fitch’s adverse scenario in which production outpaces demand for the foreseeable future, resulting in an average price of $40.00 per barrel through the end of 2019.