Oil sinks 7% into bear market on oversupply fears

Will Gas Prices Go Up? Saudi Arabia to Cut Production

Capital Economics said it was clear that "fears over excess supply in the oil market are starting to build".

Brent ended down US$4.65, or 6.6 per cent, to US$65.47 a barrel, the largest one-day loss since July 2018.

In its monthly report, OPEC said world oil demand next year would rise by 1.29 million barrels per day, 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.

"The recent downward revision to the global economic growth forecast and associated uncertainties confirm the emerging pressure on oil demand observed in recent months".

Brent crude prices were trading at $68.15 per barrel, down 2.08% from their previous close. While OPEC and its allies including Russian Federation had been pumping more in anticipation of Iran's exports falling to zero, de facto group leader Saudi Arabia now says the producers should reverse about half the output increases they made earlier this year.

Riyadh indicated on Monday it was on course to ignore the U.S. president's wishes at OPEC's next meeting due in December because it saw a need to reduce OPEC output by a collective one million barrels per day during 2019.

But since May, Opec+ have ramped up output while at the same time the United States continued to grow its oil production, which reached a record of 11.6 million bpd earlier this month.

Saudi Arabia's energy minister Khalid al-Falih said on Sunday that the kingdom will reduce exports by around 500,000 barrels a day from November to December. In addition, Russian Federation has given mixed signals about a cut, with Lukoil CEO Vagit Alekperov saying Monday he did not see cuts being necessary.

"Twelve days in a row is insane - but there are a lot of pieces putting pressure on the market", said Bob Yawger, director of energy futures at Mizuho.

USA futures were on track to close lower for a record 12th straight session, with Tuesday's selloff the worst yet.

Anxious by a drop in oil prices and rising supplies, OPEC is talking again of reducing production just months after increasing it. "These unusual bedfellows no longer seem like they're in the same bed anymore".

That came after reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption.

The steep decline has occurred as speculators have pulled back on their heavy bets on oil. Right now, oil is resting on support from the 61.8 retracement level and November 2017 low.

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