Oil prices fell to their lowest in more than a year, on course for their biggest one-month decline since late 2014.
Oil supply, led by U.S. producers, is growing more quickly than demand. OPEC and non-OPEC producers considered cutting production to try to stem a rising global surplus. OPEC will start cutting the output following the meeting of the 6th of December. The value of an oil barrel has dropped by 20% so far this month, in a seven-week streak of losses.
Benchmark Brent crude oil fell $3.26 a barrel, or 5.2%, to $59.34, its lowest since October 2017. By 1340 GMT, Brent was trading around $59.60, down $3.00.
U.S. crude lost $4.00, or 7.3%, to touch a low of $50.63 a barrel, also the weakest since October 2017.
Volatility has surged to its highest since late 2016, as investors rushed to buy protection against further steep price declines.
Volatility, a measure of investor demand for a particular option, has jumped above 60% for very bearish near-term sell options. It has been double comparing to what it was two weeks ago.
Oil production has surged this year. The International Energy Agency expects non-OPEC output to rise by 2.3 million barrels per day (bpd) this year. Oil demand next year, meanwhile, is expected to grow by 1.3 million bpd.
Forex – Commodities – Year low for oil prices as the global surplus grows
Sterling fell nearly 0.5% towards $1.28 as an oil prices slide, and a sturdy dollar prompted traders to take profits. Hopes that Britain and EU officials will agree on a draft text sent the pound briefly rallying on Thursday. A close post-Brexit relationship on Sunday brought relief to companies and investors after months of tense negotiations.
Against a broadly resurgent dollar, the British currency fell 0.5% to $1.2802 while it was a tad firmer against the euro at 88.50 pence.
The euro slumped 0.5% on Friday on signs that economic growth could be slowing across the euro zone. Further, worries about Brexit and Italy’s budget negotiations also weighed on the single currency. The euro also dropped 0.2% against the Swiss franc to 1.1326 francs.
A steep drop in oil prices on Friday fueled a risk-off wave across the board. This was what set the dollar on track for its biggest weekly rise in a month. Also, weakness in the euro supported the dollar, which rose 0.2% against a basket of his major traded rivals.
The yen was at 112.820 per dollar. The Japanese currency has traded in an extremely narrow range with a soft bias in recent trading sessions.
The Australian dollar, often considered a gauge for global risk appetite, weakened 0.2% to trade at $0.7237.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.