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US crude plunges 4.8% to $45.52, posting worst close in more than five months

Oil prices collapsed on Thursday to their lowest since late November as investor worries about the world's stubbornly persistent glut of crude erased most of the gains that followed last year's OPEC's output cut.

The slide worsened after OPEC delegates downplayed the chance that their group and other producing countries would deepen their output cuts when they meet on May 25. They did say current output cuts were likely to be extended.

U.S. West Texas Intermediate (WTI) crude futures ended trading down $2.30, or 4.8 percent, at $45.52 a barrel. Brent crude oil futures were down $2.53, or 5 percent, at $48.26 a barrel by 2:53 p.m. (1853 GMT).

Both contracts slid during the session to the lowest since Nov. 30, the day OPEC agreed to cut supply. They were on track for their biggest daily percentage declines March 8.

A laborer works at the Nahr Bin Umar oil field, southeast of Baghdad, Iraq.
Essam Al-Sudani | Reuters
A laborer works at the Nahr Bin Umar oil field, southeast of Baghdad, Iraq.

"The market continues to hunt for a bottom," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

Late last year, the Organization of the Petroleum Exporting Countries and other producing countries announced oil output cuts of 1.8 million barrels per day (bpd) for the first six months of this year.

Even so, McGillian said, "We still have a near record overhang and signs of increasing production in areas of the world outside the producers that agreed to the cuts."

Crude output has surged in the United States, with increasing rig counts for the past 11 months.

Weekly U.S. government data on Wednesday showed crude stocks fell 930,000 barrels, less than half the 2.3 million barrel drop analysts had expected. Stocks stand just 7 million barrels off a record high.

U.S. gasoline futures were down nearly 4 percent after the stockpile report indicated continued weakness in gas demand. They are have fallen more than 8 percent this year.

OPEC oil output fell for a fourth straight month in April, a Reuters survey found on Tuesday, as top exporter Saudi Arabia kept production below its target, which helped offset weaker compliance by other members.

"Saudi Arabia is the only country that has fulfilled its obligation every month since January. On one hand, it shows its commitment from OPEC's kingpin to make the supply cut agreement work. On the other hand, one can only ponder how long they are willing to shoulder the burden of supporting oil prices on their own," PVM Oil Associates analyst Tamas Varga said.

Russia, which has contributed the largest production cut outside OPEC, said as of May 1, it had cut output by more than 300,000 bpd since hitting peak production in October.

Russia's Energy Minister, Alexander Novak, said in written comments his country is inclined to extend its output cuts. But many in the market believe steeper cuts are needed to reduce the glut significantly.

"At some point, the market should recognize OPEC isn't the most important player in the market any more," said Commerzbank's Eugen Weinberg, "That is non-OPEC, and, above all, U.S. shale."

U.S. energy company shares fell along with crude on Thursday. Chevron was down 2 percent, Exxon Mobil was down 1.3 percent and EOG Resources was down 3.8 percent.

— CNBC's Tom DiChristopher contributed to this report.