Crude oil prices have sharply extended their declines today. Brent was well below the $50 handle and was trading around $49 per barrel at the time of this writing, while WTI has dropped to $46 per barrel. The number one driver behind the oil price slide is ongoing concerns about excessive supply. This is reflected in renewed increases in U.S. oil production, which rose for the eleventh consecutive time last week. At nearly 9.3 million barrels per day, U.S. oil production is thus at its highest level since August 2015. Since the start of the year alone, U.S. oil output has risen by 520,000 barrels per day. This was always going to happen after we had seen sharp and consistent increases in the rig counts as oil prices recovered. But inventories have started to fall back in the past several weeks. If the falls could be sustained, this could put a floor under slumping oil prices in the coming weeks. The latest weekly oil inventory report from the EIA was released yesterday. It had been expected we would see a sharp drawdown of around 3.3 million barrels in U.S. oil stockpiles. After all, a 4.2 million barrel decline is what the API had predicted the day before. However, the official EIA headline figure showed only a 0.9 million barrel drawdown. This was well off the mark and as such bullish speculators were left disappointed again. Despite the miss, though, this was still the fourth oil inventory decline in as many weeks. Out of the past four weeks, two of the inventory reductions had been more pronounced, one in line, and this one lower than expected. So on average, oil inventories have been declining over the past four weeks by roughly expected amounts. In addition to excessive supply worries, expectations of weaker demand from China is also weighing on oil prices and commodities in general. The latest manufacturing PMI data from the world’s second-largest economy came in weaker-than-expected earlier this week. But we need to see further evidence that China is, in fact, slowing down once again. One month’s worth of data is not enough. But with oil being driven primarily by supply factors, the focus of the market will be on the OPEC again. Will they agree to extend a deal to limit oil production in an effort to shore up prices? Well, the market is asking serious questions now. The pressure is on.