Oil falls below $50 a barrel for first time since December

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 3 percent in New York 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 as much as $1.49 to $48.79 a barrel on the New York Mercantile Exchange and traded 90 cents lower to $49.38 a barrel at 7:45 a.m. Central time.  The contract lost $2.86, or 5.4 percent, to $50.28 on Wednesday, the biggest decline in percentage terms since February 2016.

U.S. Output

Brent for May settlement fell as much as $1.51 a barrel, or 2.8 percent, to $51.60 a barrel on the London-based ICE Futures Europe exchange. Prices dropped $2.81, or 5 percent, to $53.11 on Wednesday. The global benchmark crude traded at a premium of $2.36 to May WTI.

See also: Shale billionaire Hamm says industry binge can ‘kill’ oil market

Saudi Arabia’s Oil Minister Khalid Al-Falih said this week global inventories are falling slower than expected, opening the door to extend the output-cut deal beyond its initial six months.

U.S. crude production increased for a third week to 9.09 million barrels a day, the Energy Information Administration said Wednesday. The nation’s output is projected to surge to a record 9.73 million barrels a day next year, according to the EIA’s monthly Short-Term Energy Outlook on Tuesday.Oil

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