From Bloomberg
Oil tumbled below $54 a barrel for the first time in a year amid concern OPEC’s plans to cut production won’t be enough to stem a surge in stockpiles and a selloff in global equities.
Futures for January delivery fell as much as 6.2 percent in New York. A government report on Wednesday may show U.S. crude inventories rose by 3.5 million barrels last week, according to a Bloomberg survey of analysts. Russia, meanwhile, is sowing doubts about whether it will join the Organization of Petroleum Exporting Countries in its next round of output cuts.
A slump in U.S. equities added to worries about slackening demand. The S&P 500 Energy Index slumped as much as 3.3 percent, with all of its members down on the day. Marathon Oil Corp. and Devon Energy Corp. were the worst decliners, losing more than 6 percent each.
“I think you’re going to see a risk-off type of market,” Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said in an interview. “It wouldn’t be surprising to see new lows being printed on oil” if U.S. inventories surge.
Russian Energy Minister Alexander Novak said Monday that the country and its allies in OPEC need to watch the oil market in the coming weeks before making any decisions to reduce output. The wait-and-see approach contrasts with Saudi Arabia’s call for cuts, just weeks before a key summit in Vienna.
Crude markers in New York and London have both fallen more than 20 percent from their October highs on concerns over a supply glut after the U.S. granted waivers to some buyers of Iranian oil despite sanctions.
“The name of the game in the oil market is volatility,” International Energy Agency Executive Director Fatih Birol said at a conference in Oslo. “And with the increasing pressure of geopolitics on oil markets that we are seeing, we believe that we are entering an unprecedented period of uncertainty.”
West Texas Intermediate for January delivery sank $3.10 at $54.10 a barrel on the New York Mercantile Exchange at 10:24 a.m. local time. Total volume traded Tuesday was 73 percent above the 100-day average.
Brent for January settlement dropped $3.04 to $63.75 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.63 premium to WTI.
