Oil hits lowest in a year as Organization of the Petroleum Exporting Countries mulls output cut

Petroleum Exporting Countries

LONDON: Oil fell to its lowest level in more than a year on continued concerns about an increasing global surplus, even as producers considered cutting output to curb supply. Prices were on course for their biggest one-month decline since late 2014.

Oil supply, led by US producers, is growing more quickly than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries (OPEC) is expected to begin trimming output after a meeting on December 6.

in a seven-week streak of losses. Brent crude oil fell $3.34 a barrel, or 5.3%, to $59.26, its lowest since October 2017. By 1430 GMT, Brent was trading about $59.75, down $2.85. US light crude lost $4.03, or 7.4%, to touch a low of $50.60 a barrel, also the weakest since October 2017.

“Oil bears have re-asserted their authority,” stated Tamas Varga, analyst at London brokerage PVM Oil. “The weakness is the continuation of the prevailing bearish sentiment aided a little bit by the stronger dollar.” Volatility, a measure of investor demand for options, has spiked to its highest since late 2016, above 60%, as investors have rushed to buy protection against further steep price declines. Oil production has surged this year. The International Energy Agency expects non-Opec output alone to increase by 2.3 million barrels per day (bpd) this year. Oil demand in 2019, meanwhile, is expected to grow by 1.3 million bpd. Adjusting to lower demand, top crude exporter Saudi Arabia stated on Thursday that it may minimize supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd.