Crude dropped from a two-week high as Russian production climbed and new data on Chinese manufacturing signaled a slowdown in demand.
Futures fell as much as 2.2 percent in New York. Russian oil output broke a post-Soviet record in October for the fourth time this year, while Iran said it will tell OPEC next month of its plans to raise production by 500,000 barrels a day. China’s purchasing managers index remained at 49.8 in October, the National Bureau of Statistics said Sunday, compared with an estimate of 50, the line between expansion and contraction.
Oil has traded below $50 a barrel since October amid signs of a prolonged global glut as rising U.S. stockpiles keep supplies more than 100 million barrels above the five-year seasonal average. The Organization of Petroleum Exporting Countries continues to pump crude above the limit the group set for itself, with production near the highest level since 2008.
“Russian output reached another post-Soviet high and there were more disappointing numbers out of China, putting an end to the rally late last week,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. “We continue to pivot on either side of $45 a barrel, and I don’t see that changing for a while.”
West Texas Intermediate for December delivery fell 55 cents, or 1.2 percent, to $46.04 a barrel at 9:08 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 10 percent below the 100-day average. Prices have decreased 14 percent this year.
Brent for December settlement dropped 47 cents, or 1 percent, to $49.09 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $3.05 premium to WTI.
Russia’s production of crude and gas condensate, which is similar to a light oil, averaged 10.78 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit. That’s an increase of 1.3 percent from a year earlier and 0.3 percent more than the previous month.
Iran will officially inform other OPEC members of its intention to raise crude production at the group’s Dec. 4 meeting, Oil Minister Bijan Namdar Zanganeh said in an interview with the Mehr news agency.
Iran’s plans to boost output by 500,000 barrels a day won’t cause crude prices to decline because the market already accounts for the additional barrels, Mehr reported citing Zanganeh. The Middle Eastern nation expects to raise output by 1 million barrels a day by the end of Iranian year in late March.
Money managers’ short position in WTI crude jumped 24 percent in the week ended Oct. 27, according to data from the Commodity Futures Trading Commission. Net-long positions declined 15 percent, the most since July. Traders curbed their bullish stance in Brent crude during the same period to the lowest since Sept. 1. Speculators cut Brent net-longs to 161,916 contracts, according to data from ICE Futures Europe.