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Oil prices tumbled to their lowest levels since 2017 on Friday, weighed by rising crude stockpiles overhang amid a dim economic outlook.

Brent crude oil futures for January delivery were down 1 percent to $61.95 per barrel, after marking their lowest since December 2017 of $61.52 earlier in the session.

January contract US West Texas Intermediate (WTI) crude futures fell 2.5 percent to $53.24 a barrel, after dropping near an October 2017 low hit earlier in the week.

Amid the slump, the price volatility of the Brent and WTI has climbed in November, moving toward levels not seen since the financial crisis of 2008-2009 and market decline of 2014-2016.

Rising Crude Supply, Global Economic Slowdown Hit Prices

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Weakness in oil prices came even as markets expect the Organization of the Petroleum Exporting Countries (OPEC) to start limiting supply after a meeting due to take place on December 6.

Adapting to lower demand, top crude exporter Saudi Arabia stated on Thursday that it might cut supply, with Saudi Energy Minister Khalid al-Falih stating that January demand for the country would be lower, and that they will not sell oil that customers do not need.

The country is pushing oil output cuts of as much as 1.4 million bpd within the OPEC and the larger group known as OPEC+, which includes 24 producers, to prevent a supply glut. The group will meet in Vienna on December 6 to discuss supply policy for the next six months.

A US bank said it saw a far greater probability that OPEC reaches an agreement to balance the market in 2019 than not, adding that this would likely support oil prices in the high-$50s, at least near term.

The difference between the US and international crude comes as rising North American stockpiles are clogging the system and weighing prices there, while global markets are slightly tighter, partly due to lower exports from Iran as a result of the recently imposed US sanctions.

Still, oil supply worldwide has grown in 2018, with the big three producers – the US, Russia, and Saudi Arabia – producing more than a third of global consumption, which stands approximately 100 million barrel per day (bpd).

Also part of the problem is the multiple waivers to Iran sanctions approved by the US, as those waivers would mean plenty of Iranian oil will keep flowing in the market.  

A US investment bank stated that the market has a difficult time setting a price floor as it is currently oversupplied.

High output comes as the demand outlook fell on the back of a global economic slowdown.

Shares in Shanghai experienced significant losses in five weeks on Friday by 2.5 percent, amid concerns over China’s economic growth and doubts over the odds of President Xi Jinping and US President Donald Trump reaching a de-escalation agreement in the China- US trade war when they meet next week.  

Prices have lost about 30 percent since their last highs in October, as global production began rising above consumption in the fourth quarter of this year, snapping a period of undersupply that started in the first quarter last year.

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