Oil prices edged lower due to concerns of oversupply and a strong dollar but losses were limited by expectations that the Organisation of the Petroleum Exporting Countries and Russia would agree some form of production cut next week.
The two benchmarks, North Sea Brent and US crude , still have had their weakest month in more than 10 years in November, losing more than 20 per cent as global supply has outstripped demand.
Front-month Brent futures fell 80 cents, or 1.3 per cent, to settle at $US58.71 a barrel, ahead of expiry.
The more active February Brent crude futures lost 45 cents to settle at $US59.46 a barrel.
US crude dropped 52 cents, or 1 per cent, to $US50.93 a barrel.
Oil prices also came under pressure as the dollar rose against a basket of currencies as investors hoped that the United States and China would come to an agreement over trade talks.
A stronger dollar makes greenback-denominated oil more expensive for holders of other currencies.
Prices pared losses from session lows after Bloomberg reported OPEC’s advisory committee suggested decreasing production by 1.3 million barrels per day from last month’s levels, traders said.
‘Oil prices bounced back late in the day on Friday on reports that the OPEC committee had suggested a 1.3 million barrel per day cut from the October level,’ said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
‘The pressure has certainly been building as prices continued to fall amid ongoing concerns over excessive supply and lower demand growth … If no action is taken, oil prices could certainly drop further, while a production cut should lead to a sizeable rebound for these severely oversold levels.’
Before the OPEC meeting in Vienna, the world’s top three producers – the United States, Russia and Saudi Arabia – will be part of a meeting this weekend of the Group of 20 industrialised nations in Buenos Aires, Argentina.
Russia’s energy minister Alexander Novak will meet his Saudi counterpart at the G20 summit in Argentina and discuss an oil output reduction in 2019, RIA news agency cited Novak as saying.
He was also reported to have said that Russia’s 2019 oil output is expected at the same level as this year but could be adjusted, depending on a deal between OPEC and non-OPEC members.
Surging oil production in the United States, Russia and by members of the Middle East-dominated OPEC has helped fill global inventories and create a glut in some markets.
US crude oil production rose about 129,000 barrels per day in September to a fresh record of about 11.5 million bpd, the Energy Information Administration said in a monthly report.
A slowdown in oil demand growth is compounding the emerging oversupply.
‘At the heart of the malaise are concerns that OPEC will not do enough to address the current oversupply,’ said Stephen Brennock, analyst at London brokerage PVM Oil.
The weakness in sentiment is visible in the Brent forward price curve, which now has prices for future delivery above those for immediate dispatch, a structure known as ‘contango’, which can make it attractive to put oil into storage.
Brent crude speculators cut their net long positions to the lowest level since 2015 in the week through Tuesday.
Brent net longs fell 14,057 contracts to 168,512 according to data from the Intercontinental Exchange.
A monthly Reuters survey indicates that output in November from the 12 OPEC members with supply reduction targets under a previous production agreement fell 110,000 bpd from October, while total OPEC output decreased by 160,000 bpd.
A CME group indicator suggested that expectations of a production cut were weakening.
The tool, known as OpecWatch, uses West Texas Intermediate crude oil options markets to calculate the probabilities of certain outcomes of OPEC meetings.
The market sentiment has shifted from a 70 per cent expectation of a small production cut earlier this week to about a 56 per cent chance on Friday, CME Group said.
Oil inventories are rising fast in the United States, where crude stocks have risen for 10 straight weeks to 450.5 million barrels, the most in a year, as production remains at an all-time high of 11.7 million bpd, according to the Energy Information Administration.
US energy firms this week added oil rigs for a third week in four and increased the rig count for the fifth month in a row, General Electric Co’s Baker Hughes energy services firm said in its closely followed report.