Oil fell on Wednesday as a swelling supply glut and signs of an economic slowdown weighed on crude prices a day ahead of an OPEC meeting at which the producer club is expected to decide supply cuts.
International Brent crude oil futures were at 61.16 dollars per barrel at 0757 GMT, down 92 cents, or 1.5 per cent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at 52.40 dollars per barrel, down 85 cents, or 1.6 percent.
Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said U.S. crude inventories rose by 5.4 million barrels in the week to Nov. 30, to 448 million barrels, in a sign that U.S. oil markets are in a growing glut.
Official U.S. government oil production and inventory data is due later on Wednesday.
In the Middle East, Saudi Arabia produced a record 11.3 million barrels per day (bpd) in November, adding to the swelling glut.
Reuters technical commodity analyst Wang Tao said WTI could soon test support at $51.75 per barrel, while Brent was threatening to drop below 60 dollars per barrel again soon.
China’s government has warned of increasing economic headwinds and as Japan was expected to report another quarter of GDP contraction.
Observers said this was a sign that U.S. oil markets are in a growing glut.
More broadly, the slide in U.S. oil followed a tumble in global stock markets on Tuesday, with investors worried about the threat of a widespread economic slowdown.
Key to the global economic outlook will be whether the U.S. and China can resolve their trade disputes.
Washington and Beijing announced a 90-day truce on Saturday, during which neither side will further increase punitive import tariffs.
In a sign of easing tensions between the world’s two biggest economies, Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March .
This was after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, people with knowledge of the matter said.
U.S. President Donald Trump threatened on Tuesday to place “major tariffs” on Chinese goods imported into the U.S. if his administration didn’t reach a desirable deal with Beijing.
China’s state council on Wednesday issued guidance to support employment as the economy slows, saying the country should pay “high attention” to the impact on employment from increasing economic headwinds.
Bank of America Merrill Lynch said in its 2019 economic outlook, published on Tuesday, that “most major economies are likely to see decelerating activity”.
It ,however, added that “a steady stream of monetary and fiscal stimulus measures” was expected to stem the slowdown.
In Asian powerhouse Japan, the economy is expected to have contracted more again in the third quarter, with the slowdown deepening, a poll showed on Wednesday, with Q3 annualized GDP expected to fall by 1.9 percent.
A slowing economy may further undermine oil prices.
Bank of America said it expected Brent and WTI prices to average $70 and $59 per barrel respectively in 2019.
Brent and WTI have averaged 72.80 dollars and 66.10 dollars per barrel so far this year.
Although Libya has more reserves in Africa, there were 37.2 billion barrels (5.91×109 m3) of proven oil reserves in Nigeria as of 2011.
The reserve ranked Nigeria as the largest oil producer in Africa and the 11th largest in the world, averaging 2.28 million barrels per day (362×103 m3/d) in 2006.
The News Agency of Nigeria (NAN) reports that much of the successes, about 100 per cent rise, recorded in the production was because of an Amnesty programme introduced to curb militancy in the South South region by the late President Umaru Yar’Adua.
President Muhammadu Buhari had built on that legacy with additional incentives to the region, including the opening of a Maritime University in Okerenkoko, Delta, and the clean up of Ogoni spill in Rivers.