Oil traded near a five-year low as Russia reiterated that it will keep crude output steady next year, mirroring OPECs strategy to refrain from curbing supply to tackle a global glut.

Futures fell as much as 1.4 percent in New York after sliding below $55 a barrel yesterday for the first time since May 2009. Production from Russia, the worlds largest crude producer, will be similar to this years 10.6 million barrels a day, Energy Minister Alexander Novak said. Iran is said to be offering supplies to Asia at the deepest discount in 14 years, taking a cue from Saudi Arabia in reducing price differentials.

Oil has slumped 45 percent this year as a surge in shale drilling lifted U.S. output to a three-decade high amid slowing global 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 cut output quotas to stem the price rout.

West Texas Intermediate for January delivery dropped as much as 76 cents to $55.17 a barrel in electronic trading on the New York Mercantile Exchange and was at $55.37 at 8:45 a.m. Singapore time. The contract gained 2 cents to $55.93 yesterday. Total volume was about 59 percent below the 100-day average. Prices are set for the biggest annual loss since 2008.

Brent for January settlement expired yesterday after declining $1.20, or 2 percent, to $59.86 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude ended the session at a premium of $3.93 to WTI.

Source : Bloomberg