A national report this week that inventories had jumped at the Cushing hub in Oklahoma apparently resulted in the price of oil to drop below the $50-a-barrel mark this week in New York.
It was the first time in three weeks for prices to drop below the 50-dollar level as the crude market is obviously nervous about a potential glut of oil.
West Texas Intermediate fell 2.6 percent after the report by Genscape Inc. that the Cushing storage had increased significantly according to Bloomberg News.
Oil is on track for a third straight monthly decline despite efforts by OPEC, Russia and other major exporters to halt the slide.
“There’s always a question mark over to what extent the OPEC countries and Russia will or will not fulfill their promises,” said Pavel Molchanov, a Raymond James & Associates Inc. analyst. “There is naturally some skepticism.”
It typically takes about six weeks for OPEC nations to implement supply changes, and Saudi Arabia, the group’s biggest producer, faces added political pressure from President Trump to keep the taps open, Molchanov said.
West Texas Intermediate for January delivery fell 2.2 percent to $50.07 a barrel at 11:39 a.m. on the New York Mercantile Exchange. In earlier trading, the price fell as low as $49.86.
Brent for February settlement fell 60 cents to $59.68 on London’s ICE Futures Europe exchange.
“People are looking for evidence that the fundamentals are improving before committing to going long,” said Bart Melek, head commodity strategist at TD Securities in Toronto.
