Oil hits multi-month lows as downbeat mood persists

Oil hits multi-month lows as downbeat mood persists

Crude's heading for its worst quarterly loss in four years on fears the relentless growth in American shale will undermine efforts by OPEC and its partners to balance the market.

Oil's poised for its biggest weekly drop in a month on concerns of weakening growth and doubts over whether the OPEC+ coalition's output curbs will counter surging USA supply.

Oil's slump persisted this week on broader market turmoil spurred by a plunge in global equities after the US central bank lowered the forecast for 2019 growth to 2.3 percent from 2.5 percent in September.

Oil prices extended this week's sell-off on Friday, posting the worst weekly performance in almost three years, as global oversupply kept buyers away from the market ahead of the long festive break. Front-month Brent is set to lose around 9 percent this week.

Brent crude futures rose $1.61 to $57.87 a barrel, a 2.9 percent gain, by 11:03 a.m. EST (1603 GMT).

Both major oil futures contracts rallied sharply on Wednesday but are now at or close to their lowest levels for over 14 months, more than 30 percent below multi-year highs reached at the beginning of October.

The big oil producers in OPEC, dominated by Middle East Gulf states which mostly rely on energy exports, have agreed to reduce production to try to push up prices.

"The bear fest continues", said Stephen Brennock, analyst at London brokerage PVM Oil.

Saudi Arabia's energy minister, Khalid al-Falih, said on Wednesday he expected global oil stocks to fall by the end of the first quarter. "This will compound a glut in OECD commercial oil stocks".

OPEC has agreed recently to cut production by more than one million barrels per day, but production is at its peak in three major oil producing countries, the U.S., Saudi Arabia and Russian Federation.

To show its commitment to reducing supply, Opec will release a table detailing output cut quotas for its members and allies such as Russia, Opec Secretary General Mohammad Barkindo said in a letter reviewed by Reuters.

OPEC will cut 0.8 million barrels per day from January with additional contributions of 0.4 million barrels per day of cuts.

While the recent oil price drop suggests many don't believe these cuts will be as effective as the first ones in 2017, Zuercher noted a report by the Wall Street Journal that Saudi Arabia plans to cut more than initially expected, and the fact that Venezuela's production would likely continue downwards as would Iran's under the weight of USA sanctions.

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