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By Bloomberg

Crude oil slipped back into a bear market Thursday, disappointing U.S. shale drillers that pinned their hopes on higher prices.

West Texas Intermediate, the benchmark U.S. contract, tumbled 21 percent since June 10 to $48.45 a barrel, erasing more than $100 billion in market value from the companies in the Bloomberg Intelligence North America Independent Explorers and Producers Index.

Crude’s recovery fizzled amid a worldwide glut that shows little sign of abating. U.S. production remains near the highest level in four decades, output from Saudi Arabia and Iraq surged to record levels, and Iran is focused on resuming exports after reaching a nuclear agreement with world powers.

“The commodity price is telling the U.S. shale sector to shrink,” said Subash Chandra, an oil analyst at Guggenheim Securities LLC in New York. “Barrels from the U.S. are on a collision course with barrels coming out of Iran, Saudi Arabia and elsewhere.”

U.S. shale drillers have slashed spending and cut workers this year as prices fell. Most companies in the index spend money faster than they earn it, making up the difference with debt, according to data compiled by Bloomberg. Of the $207 billion in bonds issued by members of the BI index, more than $24 billion is trading at distressed levels, meaning yields are 10 percentage points above U.S. Treasuries, as investors demand higher returns to compensate for the risk of not getting repaid.

“Just when you thought it was safe to go back into the oil patch -- whack!” Phil Flynn, senior market analyst for Price Futures Group Inc., said by phone from Chicago. “The bear market is definitely putting another round of fear into the shale patch and the bankers of the shale patch.”