Oil prices slumps up to nearly 8 per cent to the lowest in more than a year on Friday.
Oil prices slumps makes the seventh consecutive weekly loss, amid major producers consider cutting output.
Oil supply, led by US 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 December 6.
However, there has been little done for oil prices slumps which have dropped to more than 20 percent so far in November, making a streak of losses in the seventh week.
Oil prices slumps were on course for their biggest one-month decline since late 2014.
A trade war between the United States and China, has weighed upon the market.
Phil Flynn, an analyst at Price Futures Group in Chicago, said referring to expected talks next week between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires, “The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well.”
“The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand,” Phil Flynn said.
Brent crude futures settled down $3.80 a barrel, or 6.1 per cent at $58.80. During the session, the benchmark dropped to $58.41, the lowest since October 2017.
US West Texas Intermediate crude lost $4.21, or 7.7 per cent, to trade at $50.42, also the weakest since October 2017. In post-settlement trade, the contract continued to fall.
For the week, Brent fell 11.3 per cent and WTI posted a 10.8 per cent decline, the largest one-week drop since January 2016.
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 seven per cent 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.
US President Donald Trump has made it evident that he does not want oil prices to rise. Various analysts believes Saudi Arabia is coming under US 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 slump 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.
If OPEC does not trim production, prices could head much lower, potentially depreciating toward $50 a barrel, argues Lukman Otunuga, Research Analyst at FXTM.