The price of oil has dropped below $50 in New York trading for the first time since December as concerns that Opec’s output cuts are failing to restrain record US stockpiles triggered the biggest slump in more than a year.
West Texas Intermediate fell up to 3% after losing 5.7% in the previous three sessions.
Crude supplies rose 8.2 million to the highest level in weekly US government data since 1982.
Harold Hamm, the US shale oil billionaire, had warned this week that the industry could kill the market if it embarks on another spending binge.
The market swoon stoked the second-highest West Texas Intermediate options trading volume ever and sent volatility surging.
Oil had fluctuated above $50 a barrel since the Organisation of Petroleum Exporting Countries and other nations started trimming supply for six months starting in January to reduce a global glut.
While US shale production has rebounded, larger-than-expected cuts elsewhere and signs of growing demand suggest stockpiles will eventually decline, according to Goldman Sachs.
“People are nervous about the global supply-demand balance,” Adam Sieminski, a scholar at the Centre for Strategic and International Studies in Washington and former head of the Energy Information Administration, said.
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