Ole Hansen, an analyst at Saxo Bank, said the worst of the price capitulation is potentially over but there are multiple reasons behind the latest market weakness which will continue to weigh on prices. OPEC ministers next meet on May 25.
There's a sense of "dejection" in the market that the cuts aren't working, but OPEC can still succeed if it stays the course, according to Energy Aspects Ltd.
Government data showed a modest decline for USA crude inventories and another unexpected increase in gasoline supplies as hopes about summer gas demand are frail. Chinese iron ore futures fell nearly 7 percent in Shanghai after tumbling 8 percent on Thursday. and The Canadian dollar, the Australian dollar and Russia's rouble - some of the world's most commodity- sensitive currencies - were all sent spinning, falling respectively to 14-month, four-month and seven-week lows.
Front-month Brent crude trading volume rose to the highest on record with almost 525,000 lots changing hands, according to Reuters data that extends back to 1988.
Commodity Trading Advisors were among those liquidating their contracts in the day, traders said. Russia, one of the non-OPEC countries to sign up to the cuts, has signaled that Moscow is ready to extend the production cut agreement with the oil cartel.
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The plunge has also hit the share prices of major energy companies like ExxonMobil.
Rising U.S. production and stubbornly high inventories remain key drivers of the oil price, but equally important is the level of compliance among members of the Organization of the Petroleum Exporting Countries to their pledge to cut output by 1.2 million barrels per day.
Dean Rogers, senior technical analyst at Kase & Co, said charts showed the next potential stalling points were $44.20 for WTI and $47.20 for Brent. "The Fed's dot plots says 3 percent, but I'm going closer to 1.5 percent".
In November past year, OPEC and other producers, including Russian Federation agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels. Oil is being hammered by uncertainty over whether OPEC will extend an agreement to cut production and worries that renewing the deal wouldn't be enough to counter a growing glut. Baker Hughes in its weekly report on rig counts, a metric for exploration and production, surged in the United States by more than 8 percent between March and April.
"At some point, the market should recognize Opec isn't the most important player in the market any more", said Commerzbank's Eugen Weinberg, "That is non-Opec, and, above all, U.S. shale".