Brent drops below $60 as OPEC, Russia keep output steady amid glut

Brent crude oil moved above $60 a barrel on Wednesday, as US data showed falling crude inventories, stemming deep losses brought on by a supply glut and signals from the Organization of the Petroleum Exporting Countries (Opec) producers and Russia that they will not cut production.

US Energy Information Administration data showing US crude inventories falling by 847,000 barrels helped curtail losses, despite expectations of a 2.4-million-barrel draw. Analysts said the boost would not last long. “The decline in overall crude oil inventories was smallish,” said John Kilduff, partner at Again Capital LLC in New York. But analysts said any draw helped support the market after Tuesday data from the American Petroleum Institute showed a big build in US crude inventories.

Front-month Brent gained 34 cents to $60.20 a barrel on Wednesday. The January Brent contract, which expired in the prior session, had hit a low of $58.50 on Tuesday, its weakest since May 2009.

US crude oil traded 20 cents higher at 56.13, after touching its lowest since May 2009 at $53.60 on Tuesday.

Prices remain close to 5-1/2-year lows, and have almost halved over the past six months, as increasing volumes of light, high-quality crude from North American shale have overwhelmed demand.

Core Gulf Opec members have said they were prepared to wait as long as a year for the market to stabilise, undercutting hopes they will step in to stem crude price losses.

“Everyday now you have some Gulf Opec member actively trying to talk the market down,” said Olivier Jakob, oil analyst at Petromatrix. “Opec is trying to choke US oil producers.”

Earlier in the day, Iraqi Kurdistan government officials said Iraqi crude oil exports to the Turkish port of Ceyhan could reach 800,000 bpd next year, higher than previously announced. Oil shipments from Angola, Africa's second-largest exporter, are also set to increase in February to 1.86 million barrels a day, the highest since 2012. Russian Energy Minister Alexander Novak has said Moscow will not cut output in 2015, even if pressure on its finances rises with the economy showing signs of severe stress, as the rouble collapses.

The crisis in Russia has sparked further concerns about energy demand growth.