Oil prices slide amid widespread market selling that exceeds expected cuts to OPEC

SINGAPORE (Reuters) – Oil dropped on Tuesday, under the weight of a massive sell-off in the stock market that undermined price support earlier in the day, because of forecasts that OPEC would introduce new production limits.

The Brent crude futures contract, the international benchmark for oil prices, was at $ 66.37 per barrel at 07:52 GMT, down 42 cents (0.6%) from their last close.

WTI (West Texas Intermediate) futures in the United States were $ 56.94 per barrel, 26 cents or 0.5% lower than their latest settlement.

Oil prices are about a quarter below their recent highs in early October, dampened by rising supply, particularly from the United States, as well as a slowdown in global trade.

"The same old adage applies … Too much supply, not enough demand," said Matt Stanley, a fuel broker at StarFuels in Dubai.

Crude oil production in the United States climbed nearly 25% this year to a record 11.7 million barrels a day.

This is because markets are anticipating a general economic slowdown, which led to a further fall in Asian stock markets on Tuesday, which compounded the sharp losses recorded on Wall Street the day before.

In the face of uncertainty, financial traders are wary of oil markets and are seeing new downside risks to US shale production growth and worsening economic prospects.

The portfolio managers sold the equivalent of 553 million barrels of crude oil and fuels over the last seven weeks, the largest reduction since at least 2013 over a comparable period.

The funds now hold a net long position of just 547 million barrels, less than half of the recent record high of 1.1 billion at the end of September, and a drop from the record of 1.484 billion in January.

(GRAPHIC: drilling, production and storage of oil in the United States – tmsnrt.rs/2PBfE7z)

OPEC cuts expected

Concerned about an emerging surplus of production similar to that which led to a fall in prices in 2014, the Organization of the Petroleum Exporting Countries (OPEC) calls for a reduction in the supply of 1 million to 1.4 million barrels a day.

"We expect that OPEC will accept a reduction in the offer at its next official meeting on December 6," said French bank BNP Paribas.

The bank added that it expected Brent to recover at $ 80 a barrel by the end of the year.

"In 2019, we expect WTI to average $ 69 a barrel and Brent $ 76 a barrel," said BNP.

The International Energy Agency (IEA), which defends the interests of oil consumers, warned OPEC and other producers on Monday about the "negative consequences" of supply cuts, with many analysts fearing soaring crude prices does not affect consumption.