Oil prices have declined in the wake of a broad stock market sell-off, which outweighed expectations that OPEC will introduce new supply cuts.
International benchmark Brent crude oil futures fell 42 cents, or 0.6%, to reach $66.37 a barrel, US West Texas Intermediate (WTI) futures dropped 26 cents, or 0.5%, to stand at $56.94, Reuters reported.
Since reaching four-year highs early last month, crude prices decreased by 25% due to rising supply and a slowdown in global trade.
StarFuels fuel broker Matt Stanley was quoted by the news agency as saying: “The same old adage applies: too much supply, not enough demand.”
The surging production is mainly from the US. Crude oil production in the country increased by 25% this year to reach a record 11.7 million barrels per day (Mbpd).
Prices were also affected by market expectations of an economic slowdown, which resulted in Asian stock markets dropping again on 20 November, extending sharp losses on Wall Street the previous day.
Amid the uncertainty, financial traders are wary of oil markets, seeing further price downside risks from surging US shale production and the deteriorating economic outlook.
Over the last seven weeks, portfolio managers have sold the equivalent of 553 million barrels of crude and fuels, which represents the largest reduction over a similar period since at least 2013.
Saudi Arabia is pushing the Organization of the Petroleum Exporting Countries (OPEC) to introduce a supply cut of 1Mbpd to 1.4Mbpd to prevent oversupply.
BNP Paribas said: “We expect OPEC to agree to a supply cut at its next official meeting on 6 December.”
The bank also stated that it expected Brent crude prices to recover to $80 per barrel before the end of the year.
Reuters quoted BNP as saying: “In 2019, we expect WTI to average $69 per barrel and Brent $76 per barrel.”