With even more oil entering the U.S. stage, the price for West Texas Intermediate crude oil dropped more than $1 per barrel in early Tuesday trading.
Global crude oil prices have shed more than 25 percent of their value since June in response to slow economic growth and an increase in production from U.S. shale deposits. More U.S. oil means less reliance on foreign crude oil, forcing oil-producing nations to compete for export markets in expanding Asian economies and elsewhere.
Crude oil futures traded relatively flat Monday as markets took a wait-and-see approach to last week's plunge that greeted a decision from the Organization of Petroleum Exporting Countries to keep crude oil output static at 30 million barrels per day.
A decision to curb production would have raised global oil prices, giving some relief to U.S. producers working in the capital-intensive shale sector. West Texas Intermediate, the U.S. benchmark, lost more than $1 per barrel in early Tuesday trading to fetch around $68 per barrel for the January contract.
Shale oil is more expensive to extract than other grades. Sector analysts have said oil priced at around $70 per barrel would be the point where shale could become too expensive to produce.
On Tuesday, U.S. major Chevron Corp. and its consortium partners announced crude oil production started at the Jack/St. Malo project in the deep waters of the U.S. Gulf of Mexico, one of the region's largest.
"The Jack/St. Malo project delivers valuable new production and supports our plan to reach 3.1 million barrels per day by 2017," George Kirkland, vice chairman and executive vice president for upstream operations at Chevron, said in a statement.
If realized, that would be roughly three times the current rate of production from the Bakken shale oil field in North Dakota.
Brent crude, the global benchmark, moved more or less in parity with WTI, trading down about 75 cents per barrel early Tuesday for $71.77 for January delivery.
