Oil prices tumbled to their lowest level in 2018 on Friday in a volatile session on signs of oversupply amid bleak economic prospects. The drop came despite market expectations that the OPEC will begin curbing production after a meeting scheduled for Dec. 6.
Brent crude futures fell to their lowest level since December 2017 at $61.52 a barrel before recovering to $61.88.This level is still down 72 cents, or 1.2%, from the previous close. West Texas crude futures fell 2.5% to $ 53.29 a barrel, having been five cents from the lowest level since October 2017, recorded earlier in the week.
Overall, the supply of crude in global markets has increased this year. The three largest producers, the United States, Russia and Saudi Arabia, pumped more than a third of world consumption of about 100 million barrels a day.
"The market is overflowing at the moment," US investment bank Jefferies said Friday, adding that "the flooded market is going through a difficult time in terms of finding a floor (for the price)." The increase in production comes at a time when demand is slowing as the global economy slows.
Oil prices fell about 30% from their peak levels in early October, as world production began to exceed consumption in the fourth quarter of this year at the end of a short supply period that began in the first quarter of 2017, according to Rev. Rev.
To cope with falling demand, Saudi Arabia, the world's top crude exporter, said on Thursday it could cut supplies. Saudi Arabia is pressing OPEC to cut crude supplies by as much as 1.4 million bpd to prevent a supply crunch. The organization meets formally on December 6 to discuss production policy.
