Oil just posted its worst week in more than two years — WTI lost 9.5% and Brent lost 8.5%. The last time the two oil benchmarks fell by that much in a single week was early 2016 when the oil market was in serious turmoil and prices dipped below $30 per barrel.
Of course, the latest sell-off is the result of both oil-specific problems as well as broader equity market volatility. The rebound in the dollar and the stock market meltdown have dragged down crude. But the surge in U.S. shale production to over 10.25 million barrels per day (MB/D) in the first week of February, plus expectations of output growth to 11 MB/D later this year, have sparked fears of a return to surplus. Those fears were seemingly confirmed with a massive increase in the rig count last week — Baker Hughes said the oil industry added 26 rigs, more evidence that the shale industry is ramping up.