Oil fell to the lowest level in almost six years as signs that Saudi Arabia’s new king will maintain its production policy and rising U.S. crude inventories bolstered speculation that a global glut will persist.
Futures dropped as much as 2.7 percent in New York, extending a 6.4 percent slide last week. King Salman Bin Abdulaziz, who took over after the death of King Abdullah on Jan. 23, pledged to maintain the policies of his predecessor in a speech on Saudi national television. U.S. stockpiles climbed to 383.5 million barrels last month, the highest level for December since 1930, theAmerican Petroleum Institute reported.
Oil slumped almost 50 percent last year as the Organization of Petroleum Exporting Countries resisted calls to cut output even as the U.S. pumped at the fastest pace in more than three decades. Saudi Arabia, the world’s biggest exporter, has chosen not to reduce supply and count instead on lower prices to stimulate demand, according to Mohammad Al Sabban, an adviser to the kingdom’s petroleum minister from 1988 to 2013.
“Crude production needs to slow down first to decelerate the speed of stockpiling, which is seen to be even faster than during the 2008 financial crisis,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “With Saudi Arabia, the market hardly reacted last week and will remain unchanged as King Salman is known to be very conservative.”
West Texas Intermediate for March delivery declined as much as $1.24 to $44.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $45.09 at 11:46 a.m. Seoul time. The contract lost 72 cents to $45.59 on Jan. 23, the lowest close since March 2009. The volume of all futures traded was more than double the 100-day average.