Monitoring Desk (Reuters): Oil prices have plunged to their lowest level of 11 percent and headed for losses in a week since the third quarter of 2017 as global oversupply kept buyers away from the market ahead of holidays over the next two weeks.
Crude has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. The prospect of a possible government shutdown in the US, the world’s biggest oil consumer, has added to investors’ worries.
Oil markets have pulled back amid concerns about oversupply, despite planned production cuts by Opec.
Brent crude fell 53¢, or nearly 1 per cent, to settle at $53.82 a barrel on Friday, after falling during the session to $52.79 a barrel, the weakest since September 2017. US light crude oil settled down 29¢ at $45.59 a barrel, after earlier touching a session low of $45.13.
Both contracts fell more than 11 per cent in the week. Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest decline for three years.
The big oil producers in Opec have agreed to reduce production to try to push up prices.
But those output cuts – a reduction with Russia and other non-Opec producers of 1.2 million bpd – do not kick in until next month, and meanwhile global inventories are growing fast.
To show its commitment to reducing supply, Opec will release a table detailing output cut quotas for its members and allies such as Russia, Opec secretary-general Mohammad Barkindo said in a letter reviewed by Reuters.