Oil extended losses to trade near an almost six-year low as OPEC’s warning that prices may surge without new investment in production failed to shift the market’s focus from more immediate signs of a global supply glut.
Futures fell as much as 0.6% in New York. A spike to $200 a barrel is possible without spending for the long term, according to OPEC Secretary-General Abdalla El-Badri.
US crude inventories probably rose to 402.1 million barrels last week, the most in records dating back to August 1982, a survey shows before a government report on Wednesday.
Oil slumped almost 50% last year amid the fastest pace of U.S. crude production in more than three decades while the Organization of Petroleum Exporting Countries resisted calls to reduce output.
Prices may drop to as low as $30 a barrel, Gary Cohn, the president of Goldman Sachs Group Inc., said in an interview.
“Supply is still the issue, we need to see that cut back,” David Lennox, a resource analyst at Fat Prophets in Sydney, said.
“The potential is still for the downside in the near term because of that need to see a reduction in current production. Demand doesn’t improve rapidly on the falling price, it does take a while to kick in.”
West Texas Intermediate for March delivery declined as much as 27 cents to $44.88 a barrel in electronic trading on the New York Mercantile Exchange and was at $44.93 at 2:34 p.m. Singapore time.
The contract lost 44 cents to $45.15 on Monday, the lowest close since March 2009. The volume of all futures traded was about 53% below the 100-day average.
Brent for March settlement slid as much as 29 cents, or 0.6 percent, to $47.87 a barrel on the London-based ICE Futures Europe exchange.
It decreased 63 cents to $48.16 on Monday. The European benchmark crude traded at a premium of $2.97 to WTI.
OPEC, which supplies about 40% of the world’s oil, is open to a meeting with non-member producers to tackle the global glut, El-Badri said in an interview in London on Monday, estimating the surplus at 1.5 million barrels a day.
He didn’t offer a timeframe for when oil could reach $200 a barrel and said the market will be brought back into balance by a reduction to supply, rather than an increase in demand.
US crude stockpiles probably climbed 4.25 million barrels in the week ended Jan. 23, according to the median estimate in the survey of eight analysts before a report from the Energy Information Administration.
The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota.
Production averaged 9.19 million barrels a day through Jan. 9, the most in weekly records compiled since January 1983, data from the Energy Department’s statistical arm show.
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