Oil Prices May Have Further to Fall

Oil bulls got another piece of bad news today from an unlikely source: the Federal Reserve. U.S. crude production has continued to rise in spite of the collapse in oil prices.

The Fed’s oil extraction index clocked in at a seasonally adjusted 179.8 in February. That’s up 0.4 percent from January and 14.4 percent from a year ago. As Morgan Stanley economist Ted Wieseman put it in a note to clients, the supply/demand imbalance in the oil market “isn’t being addressed yet by lower U.S. supplies.”