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(Bloomberg) – 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 U.S. crude stockpiles continue to grow.
Futures tumbled as much as 1.8 percent in New York, after sliding 2.6 percent 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. U.S. 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 Oct. 9, 2017. The contract declined 2.5 percent to settle at $50.29 on Wednesday, the lowest close since October 2017. Total volume traded was 84 percent above the 100-day average.
Brent for January settlement, which expires Friday, fell as much as 2.1 percent 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 percent.
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 keep his government’s budget in surplus.
In the U.S., 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.
–With assistance from Tsuyoshi Inajima and Alex Longley.To contact the reporter on this story: Heesu Lee in Seoul at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Sungwoo Park, Ovais Subhani