Oil hits lowest in a year as Opec mulls output cut

Volatility has spiked to its highest since late 2016 as investors have rushed to buy protection against further declines

Volatility has spiked to its highest since late 2016 as investors have rushed to buy protection against further declines

The Journal reported the price decrease comes after a period in early October in which oil prices reached their highest rates in years. Pierre Andurand, one of oil's last remaining hedge fund managers, extended last month's record losses as plunging global crude prices continued to drain his fund. Tumult in oil markets pulled vast swathes of the futures curve almost US$2 a barrel lower. Although the Organization of the Petroleum Exporting Countries is expected to curb output, rising US oil supply has fueled persistent concerns about a global surplus. Royal Dutch Shell's B shares closed down 3.8 per cent at £23.32½, while... Trading volume was light in a shortened session after the Thanksgiving holiday. MSCI's gauge of stocks across the globe also fell.

"There is significant weakness in Europe as a whole: everything from French to German data to Brexit talk", said Bruderman Asset Management's Pursche.

Traders also fretted about a slump in the eurozone, after the closely monitored IHS Markit survey showed that business growth had been much weaker than expected this month, slowing to a four-year low.

"Crude's getting shellacked", said Kyle Cooper, director of research at IAF Advisors in Houston. The global benchmark traded at a US$7.85 premium to WTI.

"Oil prices should be much lower based on supply!"

The dollar index, which measures the greenback against a basket of six currencies, also advanced, up 0.2 percent, in keeping with the theme of declining risk appetite.

The Dow Jones Industrial Average fell 150.43 points, or 0.61 percent, to 24,314.26, the S&P 500 lost 5.45 points, or 0.21 percent, to 2,644.48 and the Nasdaq Composite added 0.38 points, or 0.01 percent, to 6,972.63.

According to Ind-Ra, Brent crude oil price, the global benchmark for crude prices, continued its upward trajectory to hit a four-year high of Dollars 86.07 per barrel on October 4 this year, as the market grappled with the expected loss of oil supply from sanction-hit Iran.

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Oil supply, led by USA producers, is growing more quickly than demand and to ward off 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 planned for December 6.

The value of a barrel of oil has fallen by about 20 per cent so far this month and has lost ground for seven straight weeks. Prices were on course for their biggest one-month decline since late 2014.

A trade war between the world's two biggest economies and oil consumers, the United States and China, has weighed upon the market.

"The market doesn't believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand", Flynn said. Brent crude, the global benchmark, nosedived to as low as $59.38 per barrel, its lowest level since October 2017. The contract hit its lowest level since late October 2017.

U.S. oil benchmark West Texas Intermediate dropped $4.21 to $50.42 a barrel for January delivery, a decline of 7.7 percent.

By the mid-European afternoon, WTI was just below $51 and Brent just under $60. Savona denied the report.

The pan-European STOXX 600 index rose 0.4 percent.

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