Oil prices fell on Tuesday, depressed by record Saudi Arabian production even as the kingdom tried to persuade other exporters to agree output cuts ahead of an OPEC meeting next week.
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Brent crude oil was down 70 cents a barrel at $59.78 by 0838 GMT, still above a 13-month low of $58.41 reached on Friday. U.S. light crude was 75 cents lower at $50.88.
Saudi Arabia raised oil production to an all-time high in November, an industry source said on Monday, pumping 11.1 million to 11.3 million barrels per day (bpd) during the month.
Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness.
“The oil price correction has become a rout of historic proportions,” U.S. investment bank Jefferies said in a note on Tuesday.
“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,” the bank said.
Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, said oil had buckled after “a surprisingly swift and pronounced change in the market mood from shortage fears to glut concerns” while the world economy was also slowing down.
Traders are now awaiting the outcome of the Group of 20 (G20) meeting in Buenos Aires and also the result of a meeting of the Organization of the Petroleum Exporting Countries.
Leaders of the G20, the world’s biggest economies, meet on Nov. 30 and Dec. 1, with the trade war between Washington and Beijing at the top of the agenda. But with the top three crude producers – Russia, the United States and Saudi Arabia – all present, oil policy is also expected to be discussed.
OPEC meets in Vienna on Dec. 6 to discuss output policy together with some non-OPEC producers, including Russia.
Saudi Arabia has been pushing for an OPEC cut, indicating it may reduce supply by 500,000 bpd.
U.S. President Donald Trump has put pressure on Saudi Arabia, OPEC’s de-facto leader, not to cut production, but most analysts expect OPEC to start withholding some supply soon.
“We suspect that producers will start to withhold exports in the coming months, putting a floor under prices,” said Capital Economics.
Fereidun Fesharaki, chairman of energy consultancy FGE, said a failure by OPEC and Russia to cut supply significantly would mean crude prices would “fall further, perhaps (with) Brent at $50 per barrel and WTI of $40 per barrel or less.”
(Reporting by Chistopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by Emelia Sithole-Matarise)