BOSTON (Reuters) - Oil prices slumped more than 6 percent to the lowest in more than a year on Friday amid fears of a supply glut even as major producers consider cutting output.
Oil supply, led by U.S. producers, is growing faster 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 is expected to start trimming output after a meeting on Dec. 6.
But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Prices were on course for their biggest one-month decline since late 2014.
A trade war between the world’s two biggest economies and oil consumers, the United States and China, have weighed upon the market.
“The market is pricing in an economic slowdown - they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago, referring to expected talks next week between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires.
“The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand,” Flynn said.
Brent crude fell $3.13, or 5 percent, to $59.47 a barrel by 1:01 p.m. EST (1801 GMT), after earlier touching $58.41, its lowest since October 2017.
U.S. West Texas Intermediate crude (WTI) lost $3.35, or 6.1 percent, to trade at $51.28, and earlier touched a low of $50.53, also the weakest since October 2017.
For the week, Brent was on track for a 11 percent loss and WTI a 9.4 percent decline.
Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally.
Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago.
Crude production has soared as well this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million barrels per day (bpd) this year while demand next year was expected to grow 1.3 million bpd.
Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd.
However, Trump has made it clear that he does not want oil prices to rise and many analysts think Saudi Arabia is coming under U.S. pressure to resist calls from other OPEC members for lower crude output.
If OPEC decides to cut production at its meeting next month, oil prices could recover, analysts say.
“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. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients.