The oil falls on record Saudi production; eyes of the G20 and the OPEC by Reuters

By Christopher Johnson

LONDON (Reuters) – Oil prices fell on Tuesday, depressed by Saudi record production even as the kingdom was trying to persuade other exporters to agree on a reduction in production before the meeting. OPEC next week.

Brent crude oil () was down 70 cents a barrel at 59.78 US dollars by 08:38 GMT, still above the lows reached for the first 13 months of 58.41 USD hit on Friday. US light crude () was 75 cents lower at $ 50.88.

Saudi Arabia boosted oil production to a record level in November, an industry source said Monday, yielding between 11.1 and 11.3 million barrels a day during the month.

Oil prices have lost nearly a third of their value since the beginning of October, due to the emergence of a surplus supply and the widespread weakness of the financial markets.

"The oil price correction has become a rout of historic proportions," said Tuesday the US investment bank Jefferies in a note.

"The negative price response is as severe as the financial crisis of 2008 and the aftermath of the November 2015 OPEC meeting, when the group decided not to act in the face of a highly oversupplied market," he said. the bank.

Norbert Ruecker, head of commodity research at Swiss bank Julius Baer, ​​said that the oil was out of breath after "a surprisingly rapid and pronounced change in market mood, which resulted in a shortage of fears of scarcity ", as the global economy also slowed down.

Traders are now waiting for the results of the meeting of the Group of 20 (G20) in Buenos Aires, as well as those of a meeting of the Organization of Petroleum Exporting Countries.

The leaders of the G20, the world's largest economies, met on November 30 and December 1 to discuss the trade war between Washington and Beijing. But with the three major crude oil producers – Russia, the United States and Saudi Arabia – all present, oil policy should also be discussed.

The OPEC meets in Vienna on December 6 to discuss production policy with non-OPEC producers, including Russia.

Saudi Arabia has called for a reduction in OPEC, saying it could cut the supply by 500,000 b / d.

US President Donald Trump has lobbied Saudi Arabia, the de facto leader of OPEC, for not curtailing production, but most badysts are waiting for that to happen. OPEC is starting to retain some of the offer soon.

"We believe that producers will start to retain their exports in the coming months, putting a floor under the price," said Capital Economics.

Fereidun Fesharaki, chairman of the energy consulting firm FGE, said that a failure of OPEC and Russia on a significant reduction in supply would mean that crude prices would fall further, maybe with Brent at $ 50 a barrel and WTI at $ 40 or less.