OPEC and its partners have seen the post-agreement oil rally evaporate as the U.S. inventory glut becomes impossible to ignore.
West Texas Intermediate closed at the lowest since Nov. 29. It was the day before OPEC approved the first supply cuts in eight years.
Oil fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and other countries started trimming supply for six months starting Jan. 1 to reduce a global glut. According to Goldman Sachs Group Inc., while U.S. shale output has rebounded, larger than expected cuts elsewhere and signs of growing demand suggest stockpiles will eventually decline.
West Texas Intermediate for April delivery dropped $1, or 2 percent, to close at $49.28 a barrel on the New York Mercantile Exchange. Total volume traded was about 85 percent above the 100-day average. The contract has tumbled 7.6 percent in four days.
Brent for May settlement slipped 92 cents to $52.19 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since Nov. 30.. The global benchmark crude closed at a $2.36 premium to May WTI.
Khalid Al-Falih, Saudi Arabia’s oil minister, said this week’s global inventories are falling slower than expected, opening the door to extend the output-cut deal beyond its initial six months. Producers will meet in Vienna in May to decide on the next steps. But he insisted the kingdom wouldn’t act alone.
OPEC members exceeded their pledged output reduction last month, Kuwaiti Oil Minister Issam Almarzooq told state-run news agency KUNA. Compliance by non-OPEC countries is at about 50 percent, he said.
According to the EIA’s monthly Short-Term Energy Outlook, U.S. crude production increased for a third week to 9.09 million barrels a day, the EIA said Wednesday. The nation’s output is projected to surge to a record 9.73 million barrels a day next year.