Crude Oil Tumbles Under $40 as Record Supply Glut Deepens Slide


Oil dropped below $40 a barrel in New York for the first time since August as producers’ output swelled global inventories to a record.
U.S. crude stockpiles climbed to 487.3 million barrels last week, the highest for this time of year since 1930, government data show. Oil inventories have expanded to almost 3 billion barrels because of growing output in OPEC and elsewhere, the International Energy Agency said in a report on Friday.

Crude has dropped by almost half in the past year as the Organization of Petroleum Exporting Countries pumped above its collective quota and Russian output rose to a post-Soviet high, outpacing demand growth. Iran is pushing to regain oil sales lost to sanctions after agreeing in July to accept limits on its nuclear work return for market access. Oil price competition in Europe is set to intensify when Iranian crude returns, the IEA said.

"There’s a massive inventory overhang so the market will remain very soft," said Adam Wise, who helps run a $7 billion oil and natural gas bond and private equity portfolio as a managing director at John Hancock in Boston. "There’s still inventory growth, Iran is planning to boost output by 500,000 barrels, there’s no sign OPEC will come to an agreement on Dec. 4, and there are demand concerns in Europe and Asia. (by Mark Shenk  David Marino, Bloomberg)