New York/New Delhi, March 10 (IANS) - Crude oil prices went under the psychological $50 a barrel mark on March 9 on the back of a supply glut offsetting some of output cut efforts from the Organisation of the Petroleum Exporting Countries. The West Texas Intermediate for March Delivery was trading at $49.70 a barrel on the New York Mercantile Exchange on intra-day trade, following a fall of over 5% at close of trade on March 8.
Crude oil stocks in the US surged last week an all-time high to 528.4 million barrels. Last November, major oil producers agreed to cut output as a response to the global supply glut that had been pushing down prices for nearly two years.
In early December, oil producers outside the Organisation of the Petroleum Exporting Countries (OPEC), led by Russia, agreed to reduce output by 558,000 barrels per day (bpd). This came in the wake of the 13-nation OPEC cartel's November 30 decision to cut output by 1.2 million bpd for six months effective from January 1.
This is the first time since 2001 that OPEC and some of its rivals had reached a deal to jointly reduce output to tackle the global oil glut. Oil prices had earlier fallen by more than 50% in less than two years, from levels of over $120 a barrel.
"The US inventory build-up in the last one month has been quite big..US shale production has been building up for some time. But, yesterday's build up was a huge one, which triggered a sell-off," T. Gnanasekar, Director Commtrendz Research and Fund Management told BTVi in an interview. "Anything below $50 a barrel, OPEC may consider a production cut...looks like crude would be supported at around $50," he added.