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Oil crashed below $50 a barrel for the first time in more than a year as Russia signaled little urgency to commit to supply cuts, while US crude stockpiles continue to grow.
Futures tumbled as much as 1.8% in New York, after sliding 2.6% in the previous two sessions. Just days before talks on oil policy with Saudi Arabia, Russian President Vladimir Putin said current prices are “ absolutely fine”, while Saudi energy minister said the kingdom is confident OPEC and its partners can reach a deal to stabilize the market. US crude inventories rose for a 10th week, government data show.
Crude has crashed into a bear market after America’s surprise sanctions waivers for Iranian oil fueled concern over a supply glut. As prices plunged, traders’ focus turned to G20 summit this week in Argentina where Russian leader and Saudi crown prince are expected to discuss production. The market is flirting with expectations that the Organization of Petroleum Exporting Countries and allied producers may agree on output curbs at their gathering next week in Vienna.
“Putin’s comments raised speculation that Russia may not join its fellow producers in curbing production,” Sungchil Will Yun, Seoul-based commodity analyst at HI Investment & Futures, said by phone. “At the same time, we have expanding American crude stockpiles and they are unlikely to shrink in the near future.”
West Texas Intermediate for January delivery fell as low as $49.41 a barrel on the New York Mercantile Exchange, the least since October 9, 2017. The contract declined 2.5% to settle at $50.29 on Wednesday, the lowest close since October 2017. Total volume traded was 84% above the 100-day average.
Brent for January settlement, which expires Friday, fell as much as 2.1% to $57.50 a barrel on London’s ICE Futures Europe exchange. The global benchmark traded at an $8.26 premium to WTI. The more-active February contract lost 1.3%.
While Putin praised Saudi Crown Prince Mohammed Bin Salman and said Moscow is ready to cooperate further, he said crude around $60 a barrel is “balanced and fair” and well above the level needed to to keep his government’s budget in surplus.
In the US, nationwide crude stockpiles rose by 3.58 million barrels last week in their longest such weekly streak since November 2015, according to the Energy information Administration. That’s more than the 1-million-barrel gain predicted in a Bloomberg survey, overshadowing a surprise draw in gasoline inventories.
Oil-market news WTI’s 14-day Relative Strength Index indicates the US marker’s remained in oversold territory since November 1 Shale explorers will likely cut spending budgets next year for the first time since the last price crash as crude spirals down again, analysts said. Alberta is working to buy rail cars to help ship more crude as pipeline bottlenecks have the oil-rich province grappling with historic low prices.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
