For the first time since late March, prices for U.S. crude oil ended at below $49 a barrel on Thursday, putting it back in bear market territory, according to Reuters.
Bloomberg reports that West Texas Intermediate, the benchmark U.S. contract for crude oil, dropped by 21 percent to $48.45 a barrel, the lowest since June 10. A 20 percent decrease is considered a bear market by a lot of traders.
The companies in the Bloomberg Intelligence North America Independent Explorers and Producers Index suffered greatly from the drop in prices, as $100 million were erased from their market value.
Shale drillers were hoping for an increase in price per barrel as the dollar weakens. But continued concern on the glut of supplies worldwide and the shaky demand of oil in the market has offset the weakness in the dollar.
A report from the U.S. Energy Information Administration showed that the supply of U.S. Crude increased by 2.5 million barrels last week.
Reuters believes that the supply glut will continue to grow as Iran's Nuclear deal with the West will release additional supply oil in the market
Furthermore, the recent drop in the jobless claims data that trimmed the dollar's losses, add to the shale drillers' problems.
"The dollar recovered from its lows and there is just a negative mood in commodities and for oil there is the worry that the global economy is going to affect demand," said Phil Flynn, an analyst at the Price Futures Group in Chicago, to Reuters.
Subash Chandra, an oil analyst at Guggenheim Securities LLC in New York, said that the price in commodities is telling "the U.S. shale sector to shrink," according to Bloomberg.
"Barrels from the U.S. are on a collision course with barrels coming out of Iran, Saudi Arabia and elsewhere," she said.
