Oil traded near the lowest close in more than six years as speculation OPEC will keep markets oversupplied countered a drop in U.S. crude stockpiles.
Futures slipped 0.5 percent in New York after closing 9.5 percent lower in the four days since OPEC’s Dec. 4 decision to effectively abandon its output target. The exporters’ group raised production in November to a three-year high, according to its monthly report. U.S. stockpiles along the Gulf Coast fell the most since December 2012, according to government data Wednesday. Refiners typically drain tanks to reduce their tax burden, which is determined by year-end levels.
Oil is trading near levels last seen during the global financial crisis as Saudi Arabia leads the Organization of Petroleum Exporting Countries in maintaining output and defending market share against higher-cost producers. Nationwide U.S. crude inventories remain more than 120 million barrels above the five-year average. Chevron Corp. will cut spending on exploration, drilling and other projects by almost a quarter next year in response to the price slump.
“The market’s response to yesterday’s weekly report from the U.S. Department of Energy is clear proof: the current mood is worse than the actual situation,” analysts at Commerzbank AG in Frankfurt led by Eugen Weinberg said in a report.
West Texas Intermediate for January delivery slid 18 cents to $36.98 a barrel on the New York Mercantile Exchange at 11:05 a.m. in London. The contract fell 0.9 percent to $37.16 on Wednesday, the lowest close since February 2009. The volume of all futures traded was about 1.9 percent below the 100-day average. Prices have lost 39 percent the past year.
Brent for January settlement was unchanged at $40.11 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 0.4 percent to $40.11 Wednesday, also the lowest close since February 2009. The European benchmark crude traded at a premium of $3.09 to WTI.
Output from the Organization of Petroleum Exporting Countries rose by 230,100 barrels a day in November to 31.695 million a day, the highest since April 2012, as surging Iraqi volumes more than offset a slight pullback in Saudi Arabia. The organization is pumping about 900,000 barrels a day more than it anticipates will be needed next year.
U.S. crude stockpiles fell by 3.57 million barrels through Dec. 4, according to a report from the Energy Information Administration. Supplies at Cushing, Oklahoma, the delivery point for WTI futures and the biggest U.S. oil-storage hub, expanded by 423,000 barrels to 59.4 million, the highest level since May.
Chevron, the second-largest U.S. oil producer, is focusing on investments that will deliver the highest profits in the near term while holding off on more ambitious projects that take several years to begin generating cash. About 70 percent of the spending will be for developments outside the U.S., the San Ramon, California-based company said in a statement Wednesday.