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By Bloomberg

Oil fell for a fifth day amid speculation that U.S. inventories will increase, exacerbating a global supply glut that’s driven prices to the lowest levels in more than five years.

Futures dropped as much as 1.1 percent in New York in the longest losing streak since August. Crude stockpiles in the world’s biggest consumer probably expanded by 700,000 barrels last week, a Bloomberg News survey shows before an Energy Information Administration report today. China, the second- largest consumer, won’t drive a market rebound in 2015 as its net imports will slow, Citigroup Inc. said.

Oil slumped by almost half last year, the most since the 2008 financial crisis, as the U.S. pumped the most crude in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut output. Iran has held talks with Russia to reduce supply from the world’s biggest producer, with “no conclusion reached yet,” according to Iranian Oil Minister Bijan Namdar Zanganeh.

“Demand continues to be weak to balance supplies,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone today. “Demand isn’t something that can be recovered in the short term while things are not looking great for China, and Europe is expected to be hit harder by gloomy circumstances in Russia.”

West Texas Intermediate for February delivery declined as much as 53 cents to $47.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $47.41 at 1:40 p.m. Singapore time. The contract lost $2.11 to $47.93 yesterday, the lowest close since April 21, 2009. The volume of all futures traded was 15 percent below the 100-day average.

U.S. Supplies

Brent for February settlement slid as much as 52 cents, or 1 percent, to $50.58 a barrel on the London-based ICE Futures Europe exchange. It decreased $2.01 to $51.10 yesterday, the lowest close since April 30, 2009. The European benchmark crude traded at a premium of $3.14 to WTI.

Implied volatility for at-the-money options in the front- month WTI contract rose to 60.2 percent this week, the highest level in more than three years, data compiled by Bloomberg show. It’s about 59 percent today, while Brent’s volatility was almost 49 percent.

U.S. crude inventories probably climbed to 386.2 million barrels in the week ended Jan. 2, according to the median estimate in the Bloomberg survey of nine analysts before the Energy Information Administration’s weekly report today. Supplies in the previous period were about 12 percent above the five-year average level for this time of year.

Chinese Imports

Supplies at Cushing, Oklahoma, the delivery point for WTI contracts and the largest U.S. oil-storage hub, gained by 482,000 barrels last week, the American Petroleum Institute said, according to a Twitter posting by Dominick Chirichella, a founding partner of Energy Management Institute in New York. Crude stockpiles nationwide shrank by 4 million, the industry group in Washington was said to have reported.

China’s net oil imports will probably rise 3.3 percent this year, compared with 8.9 percent in 2014, as “a slower build-out of refining capacity and record commercial storage builds in 2014 are likely to limit growth,” Citigroup strategists including Ivan Szpakowski in Hong Kong said in a research note.

In Russia, the economy’s investment-grade status is being tested as the collapse in oil, the main export earner, and sanctions over the conflict in Ukraine threaten a recession. Russia must adapt to the reality of prices that could sink to as low as $40 a barrel, President Vladimir Putin said on Dec. 18.

‘Solid Will’

While consensus within OPEC to stop the price decline is important, an emergency meeting of the 12-member group “won’t in itself solve problems,” state-run Mehr news agency cited Iran’s Zanganeh as saying.

OPEC, which pumps about 40 percent of the world’s oil, agreed to maintain its production quota at 30 million barrels a day at a Nov. 27 gathering in Vienna. Qatar has estimated the global supply surplus at 2 million barrels a day.

Oil markets are witnessing “tensions caused by many factors, chiefly the slow growth in the global economy,” Saudi Arabia’s King Abdullah said in a speech read out in a broadcast by Crown Prince Salman Bin Abdulaziz yesterday. “These tensions aren’t new to the oil market, and we’ve dealt with them in the past with a solid will, with wisdom and experience, and we will deal with the current developments in the oil markets in the same way.”