Oil Drops Below $50

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.

Oil had fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and other nations started trimming supply for six months starting Jan. 1 to reduce a global glut. While U.S. shale production has rebounded, larger-than-expected cuts elsewhere and signs of growing demand suggest stockpiles will decline, according to Goldman Sachs Group Inc.

“The bottom line here is you have wide compliance within OPEC with the production cuts and on the other hand you have increased production out of the U.S.,” Hans Goetti, chief strategist for the Middle East and Asia at Banque Internationale a Luxembourg, said in a Bloomberg television interview. “The shale oil industry in the U.S. has made great strides to cut costs.”

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.

Read more Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.