Oil dropped below $50 for the first time since December after concerns that OPEC’s output cuts aren’t tempering a surplus in the U.S. triggered the biggest slump in more than a year.
Futures dropped as much as 2.2 percent in New York to $49.20 after losing 5.7 percent the previous three sessions. Stockpiles rose 8.2 million to the highest level in weekly government data since 1982. Harold Hamm, the U.S. shale oil billionaire, warned on Wednesday that the industry could “kill” the crude market if it embarks on another spending binge.
West Texas Intermediate for April delivery dropped 74 cents, or 1.5 percent, to $49.54 a barrel on the New York Mercantile Exchange at 10:17 a.m. in London. Total volume traded was about 60 percent above the 100-day average. The contract lost $2.86, or 5.4 percent, to $50.28 on Wednesday, the biggest decline in percentage terms since February 2016.
Brent for May settlement fell as much as $1.09 a barrel, or 2.1 percent, to $52.02 a barrel on the London-based ICE Futures Europe exchange. Prices dropped $2.81, or 5 percent, to $53.11 on Wednesday. The global benchmark crude traded at a premium of $2.32 to May WTI.
See also: Shale billionaire Hamm says industry binge can ‘kill’ oil market
Saudi Arabia’s Oil Minister Khalid Al-Falih said this week global inventories are falling slower than expected, opening the door to extend the output-cut deal beyond its initial six months.
U.S. crude production increased for a third week to 9.09 million barrels a day, the Energy Information Administration said Wednesday. The nation’s output is projected to surge to a record 9.73 million barrels a day next year, according to the EIA’s monthly Short-Term Energy Outlook on Tuesday.
Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, rose a second week to 64.4 million barrels, the EIA reported.
Production from Libya’s Waha Oil Co., a venture between the nation’s state oil company and foreign partners, may be suspended as clashes in the country’s east keep the main export terminals out of service.
Royal Dutch Shell Plc will sell almost all its production assets in Canada’s oil sands in a $7.25 billion deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.