Brent crude falls below $50 in London for first time since March

LONDON (Bloomberg) -- Oil dropped below $50/bbl in London for the first time since late March on growing signs that OPEC’s production cuts are failing to clear a surplus of crude.

Brent futures lost as much as 2.2%. Crude output rose to 9.29 MMbpd, the highest level since August 2015, according to the Energy Information Administration. U.S. inventories fell less than all 11 forecasts by analysts surveyed by Bloomberg. OPEC is likely to extend production cuts for six months past June, according to Nigerian Oil Minister Emmanuel Ibe Kachikwu.

Oil is heading for a third weekly loss amid concern that increasing U.S. output will offset efforts by the Organization of Petroleum Exporting Countries and its allies to eliminate a global glut. OPEC will meet May 25 in Vienna to decide whether to extend supply cuts through the second half. Russia is said to support prolonging the curbs, according to a government official.

“The hopes of U.S. stock re-balancing are being thrown into doubt,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.

Brent for July settlement fell as much as $1.10 to $49.69/bbl on the London-based ICE Futures Europe exchange, falling below $50 for the first time since March 22. It was at $49.79 at 1:22 p.m. in London. The global benchmark crude traded at a premium of $2.61 to July WTI.

West Texas Intermediate for June delivery slid as much as $1.09/bbl on the New York Mercantile Exchange to $46.73. Total volume traded was about 43% above the 100-day average. The contract gained 16 cents to $47.82 on Wednesday.

U.S. crude output increased by 28,000 bpd last week for the longest run of gains since the week ended Nov. 23, 2012, according to EIA data. Nationwide stockpiles fell by 930,000 bbl, compared with the median estimate for a 3 MMbbl drop in the Bloomberg survey.