Two weeks before the meeting of the OPEC and non-OPEC partners, speculation has intensified that the cartel and its de facto leader Saudi Arabia may be willing to make another U-turn in oil production policy and decide to cut production next year, just months after increasing output to offset expected losses from Iran and Venezuela.
Concerned about an emerging production overhang similar to the one that led to a price slump in 2014, Opec is pushing for a supply cut of 1-million to 1.4 million barrels a day.
Oil dropped again on persistent fears that a surplus will re-emerge next year despite OPEC's plans to cut production. "It is not unreasonable to anticipate stable prices until then".
Oil traded near $57 a barrel following six weeks of losses as Russian Federation held off committing to further output curbs, opening up a gap with Saudi Arabia which has called for supply cuts. Total volume traded was 3% below the 100-day average. The contract fell as much as 7.7 per cent earlier in the session to $52.77 a barrel, the lowest since October 2017.
Around the same time, International Energy Agency and other organisations lowered oil demand and growth outlook as a fallout of high crude prices as well as the US-China trade war.
U.S. energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, a weekly report by energy services firm Baker Hughes said on Friday. US crude production has been rising, hitting a record in the week ended November 9, according to government data.
Now, OPEC and its partners are poised to cut output by as much as 1.4 million barrels per day when they meet in Vienna, Austria on December 6.
Ahead of United States inventories data, the USA benchmark hovers a cents above the 53.00 level, extremely oversold but still bearish according to technical readings in the daily chart, as indicators resumed their declines within oversold territory, while the commodity continues developing below a strongly bearish 20 DMA.
Though Russia is still not fully on board, there is a general consensus among OPEC members to suck out 1-1.4 million barrels a day - the quantity covered under waivers -through a production cut.
This comes as supply in the United States is surging.