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By Bloomberg

Oil in New York traded near a five-year low as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy to refrain from curbing supply to tackle a global surplus.

Futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is said to be offering shipments to Asia at the deepest discount in at least 14 years, taking a cue from Saudi Arabia in cutting price differentials.

Oil has slumped 44 percent this year as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing world demand growth. Leading members of the Organization of Petroleum Exporting Countries such as Saudi Arabia have resisted calls from smaller producers including Venezuela and Ecuador to reduce quotas to stem the price rout.

“OPEC won’t make a move unless the U.S. cuts its production first, and for now it looks like the game of chicken will most likely continue through next year,” Kang Yoo Jin, a commodities analyst at Woori Investment & Securities Co. in Seoul, said by phone. “As oil prices are slumping, it seems to be a strategic decision for producing countries including OPEC and Russia to keep their output levels unchanged.”

West Texas Intermediate for January delivery dropped as much as $1.32 to $54.61 a barrel in electronic trading on the New York Mercantile Exchange and was at $54.83 at 1:30 p.m. Singapore time. It gained 2 cents to $55.93 yesterday. Total volume traded was about 44 percent above the 100-day average. Prices are set for the biggest annual loss since 2008.

Russian Economy

Brent for February settlement declined as much 91 cents, or 1.5 percent, to $59.10 a barrel on the London-based ICE Futures Europe exchange. The January contract expired yesterday after decreasing 2 percent to $59.86. The European benchmark crude traded at a premium of $4.17 to WTI for the same month.

Brent’s 46 percent collapse this year is contributing to a currency crisis in Russia, which relies on energy exports for half its budget. Sanctions imposed by the U.S. and European Union over the conflict in Ukraine also spurred Russia’s largest capital outflows in six years as its economy nears recession.

The price of oil “will stabilize itself,” Novak said at the Gas Exporting Countries Forum in Doha yesterday.

Iran Discount

National Iranian Oil Co. will ship light crude to Asia at $1.80 a barrel below a regional benchmark in January, according to four people with knowledge of the decision. Its official selling price for December was at a premium of 13 cents. Similar discounts were offered earlier this month by the state oil companies of Saudi Arabia, Iraq and Kuwait.

In the U.S., crude inventories expanded by 1.9 million barrels last week, the American Petroleum Institute in Washington reported yesterday, ForexLive and LiveSquawk said on Twitter. Supplies at Cushing, Oklahoma, the delivery point for New York futures contracts, rose by 2.7 million.

Stockpiles probably shrank by 2.25 million barrels, according to the median estimate in a Bloomberg News survey of eight analysts before data from the Energy Information Administration today.

The industry-funded API collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA, the Energy Department’s statistical arm.