Record Saudi Arabian crude production has weighed down on oil prices ahead of next week’s Organisation of the Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria.
Brent crude oil LCOc1 fell 70 cents per barrel to stand at $59.78, while US light crude CLc1 went down 75 cents to $50.88 a barrel, Reuters reported.
On 23 November, Brent futures hit a 13-month low of $58.41.
According to an industry source, Saudi Arabian oil production surged to an all-time high this month. The country, which is one of the world’s biggest crude exporters, produced 11.1 million to 11.3 million barrels per day during the month.
Since reaching record highs in early October, oil prices have slumped nearly 33%, a result of emerging oversupply and financial market weakness.
US investment bank Jefferies was quoted by the news agency as saying: “The oil price correction has become a rout of historic proportions.
“The negative price reaction is as severe as the 2008 financial crisis and the aftermath of the November 2015 OPEC meeting, when the group decided not to act in the face of a very over-supplied market.”
Julius Baer commodity research head Norbert Ruecker attributed the fall in prices to ‘a surprisingly swift and pronounced change in the market mood from shortage fears to glut concerns’.
Traders are now awaiting the outcome of the G20 meeting scheduled to be held in Buenos Aires, Argentina later this week, in addition to the OPEC meeting.
The G20 leaders will discuss a range of issues with a major focus on the trade dispute between the US and China. The discussion is also expected to feature oil policy.
Meanwhile, producer cartel OPEC and other non-OPEC nations, including Russia, will discuss output policy at the upcoming meeting.
The record production from Saudi Arabia comes at a time when the country has been pushing for OPEC members to impose a supply cut to prevent supply glut.
The crude exporter has been facing intense pressure from US President Donald Trump to maintain production.
However, most analysts expect OPEC to start supply reductions in the near future.
Capital Economics said: “We suspect that producers will start to withhold exports in the coming months, putting a floor under prices.”