Oil prices sink on supply glut fears

Oil prices sink on supply glut fears

On the supply side, the key reason for the banks to see Brent Crude prices recovering from the current $63 a barrel is the expectation that OPEC will announce a production cut at its meeting in early December-of 1 million bpd or even more-to support oil prices, prevent a new glut, and drive the price of oil back into the $70s.

Friday's declines further ramp up the pressure on OPEC ahead of a much-anticipated meeting between the influential oil cartel and its allies in Vienna on December 6, when they are expected to announce that output will be curtailed.

But the anticipated cuts have done little so far to prop up the price. But the move has so far had little impact on prices, as the value per barrel has dropped by around 20 percent so far in November, in a seven-week streak of losses.

Brent crude oil fell $3.34 a barrel, or 5.3 per cent, to $59.26, its lowest since October 2017.

About 1.30pm Irish time, Brent recovered slightly to trade at $59.66 per barrel, while WTI stood at $50.98.

West Texas Intermediate crude (WTI) fell $3.37, or 6.2 percent, to $51.26 after briefly sliding about 7 percent below $51 a barrel in light trading due to the Thanksgiving holiday. "Are they going to run out of ammunition shortly or they have ample supply of bullets?"

"Oil bears have reasserted their authority", said Tamas Varga, analyst at London brokerage PVM Oil.

On Wednesday, the USA president publicly thanked Riyadh for helping to keep a lid on oil prices - but again called on the de-facto leader of OPEC to push prices even lower over the coming months.

More news: Policemen Near Isolated Andaman Island Struggle To Recover US Man's Body

Oil prices getting lower.

A trade war between the world's two biggest economies and oil consumers, the United States and China, have weighed upon the market. Thank you to Saudi Arabia, but let's go lower!

The market is experiencing its highest level volatility since late 2016 and Brent crude is down about a fifth in November alone, putting it on course for its biggest one-month decline since late 2014.

Global oil supply has surged this year.

HSBC and Societe Generale have recently said that they expect OPEC to announce at least 1 million bpd of cuts, while Barclays says that with the market widely expecting a 1-million-bpd cut, anything below that or any underwhelming decision would result in further price drops.

Demand next year meanwhile is expected to grow at a rate of 1.3 million bpd, compared with a forecast of 1.5 million bpd six months ago.

However, Trump has made it clear that he does not want oil prices to rise and many analysts think Saudi Arabia is coming under US pressure to resist calls from other OPEC members for lower crude output.

Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients: "We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3".

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