U.S. oil prices fell below $50 for the first time since in more than a year Thursday, as record domestic output and rising crude stockpiles continue to pressure world markets ahead of a key meeting of OPEC ministers next month in Vienna.
Data from the Energy Information Administration yesterday showed U.S. crude stocks rose by a bigger-than-expected 3.58 million barrels last week, the 10th consecutive gain and the longest streak since 2015, taking the total to just over 450 million barrels. Domestic output, the EIA said, held at a record 11.7 million barrels per day, making it the world's biggest producer ahead of Saudi Arabia and offsetting concerns that OPEC members, along with Russia, will agree to limit their own output next year in order to clear what they see as a global supply glut.
"Comments from President Putin yesterday only add to the uncertainty over the potential for OPEC+ production cuts in 2019," said ING commodity strategist Warren Patterson. "The President has said that Russia is fine with oil at US$60/bbl, as this is still at levels which ensure the government's budget remains in surplus. Despite this comment, we are still of the view that OPEC+ will agree to cuts at its meeting in December."
WTI contracts for January delivery were marked 43 cents lower from their Wednesday close in New York and changing hands at $49.86 per barrel, the lowest since September 2017, extending the decline from early October to around 35%, before rebounding to $50.77 per barrel after Reuters reported that Russia acknowledged the need to trim output but was still negotiating with ministers from Saudi Arabia.
OPEC ministers, along with non-cartel allies such as Russia, will meet on December 6 in Vienna to discuss potentially cutting collective output by around 1.4 million barrels per day, according to multiple media reports. However, Saudi Arabia's powerful energy minister, Khalid al-Falih, has said his country would need co-operation in order to agree to 2019 production cuts, suggesting a lack of unanimity among cartel members.
President Donald Trump, meanwhile, has kept up pressure on both Saudi Arabia and OPEC with four separate Tweets, and several public statements, on the need for lower oil prices based on global supply dynamics, which he described as "a big Tax Cut for America and the World."