Investing.com - At any other time, a 7-million-barrel weekly draw and the first record exports in U.S. crude might have sent oil prices rocketing. But not when the Russians are maintaining an elegant silence on production cuts that has OPEC and oil-dependent economies all over at their mercy.
U.S. WTI settled down $1.40, or 2.7%, at $51.49 per barrel. It sunk 5% in earlier trade, nearing another test of the $50 support, as OPEC waited to hear from non-member but heavyweight oil producer Russia on what the cartel should announce for production cuts aimed at propping up crude prices.
Brent was also down by $1.40, or 2.3%, to trade at $60.16 by 2:51 PM ET (19:51 GMT) after falling below $60 support earlier.
Crude stockpiles in the United States plunged last week for the first time in 11 weeks, the Energy Information Administration (EIA) said, announcing a drawdown of 7.3 million barrels in the week to Nov. 30, compared with analysts’ expectations for a decrease of just 942,000 barrels.
"It's a bullish draw number but the market's attention is totally on OPEC," said Tariq Zahir, managing member at Tyche Capital Advisors, an oil-focused fund in New York. "The Russians are looking they don't want to give in to a big cut. There's also a huge risk-off on Wall Street that's adding to the heat on oil."
Reuters quoted two sources as saying OPEC had a tentative production-cut deal but needed Russia's concurrence and contribution to the plan. Russia's Energy Minister Alexander Novak flew back to Moscow from Vienna to get President Vladimir Putin's assent and will return to the Austrian capital on Friday with a decision, reports said.
OPEC's de-factor leader Saudi Arabia has suggested the global oversupply in oil needs to be reduced by 1.3 million barrels per day or thereabout. But Riyadh has also said it won't carry those cuts and its own and sacrifice its market share unless others in OPEC as well as major oil producers outside the cartel, including Russia, offer acceptable reductions of their own.
The United States, Saudi Arabia and Russia have raised their oil production to record highs in recent months, turning out about 11 million bpd of oil. Despite its stature since this year as the world's largest oil producer, the U.S. does not collaborate on production balancing with Russia and OPEC as it has no national oil company to dictate policy and its industry is made up of dozens of independent producers.
The Dow's plunge added to the weight on oil as equity markets tanked after the arrest of a top executive at Chinese company Huawei Technologies sparked fresh worry over Sino-U.S. trade tensions.
More staggering than the weekly drop in crude stockpiles was EIA data showing the United States shipped 3.2 million barrels per day of oil last week, the highest ever for a country that ended its self-imposed four-decade old oil exports embargo just two years ago, at the height of the first shale crude glut of 2014-2017.
Calculations showed the net export was actually 211,000 bpd after deducting imports -- a first that was still a record, going by U.S. Energy Department figures dating to 1973.
"The surge in exports was remarkable," said John Kilduff, partner at New York energy hedge fund Again Capital. "Imports of crude oil fell by a decent amount and refiners held steady at a high rate, generating strong crude oil demand."