Oil glut pushes prices below $50 for first time since December
Concerns grow that Opec’s efforts to reduce output are not restraining US stockpiles
Opec: started trimming supply for six months starting on January 1st to reduce a global glut. Photograph: Heinz-Peter Bader/Reuters
Oil dropped below $50 in New York for the first time since December as concerns that output cuts by the Organization of Petroleum Exporting Countries (Opec) are failing to restrain record US stockpiles triggered by the biggest slump in more than a year.
West Texas Intermediate fell as much as 3 per cent after losing 5.7 per cent the previous three sessions. Crude supplies rose 8.2 million barrels to the highest level in weekly government data since 1982.
Harold Hamm, the US shale oil billionaire, warned on Wednesday that the industry could “kill” the market if it embarks on another spending binge. The market swoon stoked the second highest WTI options trading volume ever and sent volatility surging.
Oil had fluctuated above $50 a barrel since Opec and other nations started trimming supply for six months starting on January 1st to reduce a global glut. While US shale production has rebounded, larger-than-expected cuts elsewhere and signs of growing demand suggest stockpiles will eventually decline, according to Goldman Sachs.
Brent for May settlement was down 56 US cents to $52.55 a barrel on the London-based ICE Futures Europe exchange. Prices fell to $51.60, the lowest since December 1st.