Oil fell about three per cent in choppy overnight trade after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter the next day.
The Organisation of the Petroleum Exporting Countries met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan.
OPEC tentatively agreed to cut oil output but was waiting for a commitment from non-OPEC heavyweight Russia before deciding volumes.
Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in Saint Petersburg.
Novak returns to Austria’s capital on Friday for discussions among Saudi-led OPEC and its allies.
Saudi Energy Minister Khalid al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening.
‘If everybody is not willing to join and contribute equally, we will wait until they are,’ al-Falih said.
Market watchers had expected a joint cut of 1 million to 1.4 million barrels per day.
Brent crude futures were down $US1.74, or 2.8 per cent, on the day to $US59.82 a barrel, off the session low of $US58.36.
US crude futures fell $US1.60, or three percent, to $US51.29 a barrel, bouncing off the session low of $US50.08 a barrel.
The crude benchmarks have slumped more than 25 per cent so far this quarter.
Prices found support after data showed US crude stockpiles declined last week for the first time in 11 weeks.
The United States became a net exporter of crude and refined products for the first time since at least 1991, data from the US Energy Information Administration showed.
‘Fears of a further escalation in the US-China trade war, and potential for OPEC not cutting oil production deep enough will continue to weigh on oil prices in today’s trading session,’ said Abhishek Kumar, Senior Energy Analyst at Interfax Energy in London.
‘All eyes are now fixated on tomorrow’s OPEC joint declaration, and a combined output cut of at least one million barrels per day will be required to see a meaningful recovery in oil prices.’
OPEC’s crude oil production has risen by 4.1 per cent since mid-2018, to 33.31 million bpd.
European equities hit their lowest in two years.
Commodity-sensitive currencies such as the Russian rouble tumbled on sliding oil prices and the arrest of a top executive of Chinese tech giant Huawei in Canada for extradition to the United States, just ahead of crucial trade negotiations between Washington and Beijing.
Barclays said in its Global Outlook that ‘investors need to lower their expectations’ and ‘2019 should be a period of lower returns and higher volatility’.
It forecast that the global economy would ‘slow over the next several quarters’ although it added that ‘not one major economy is near recession.’
US crude inventories have climbed as domestic production surged.
US crude exports jumped last week to a record 3.2 million barrels per day.
Stockpiles at Cushing, Oklahoma, delivery point for US crude futures, rose to the highest in nearly a year.
Ann-Louise Hittle, vice president, macro oils at Wood Mackenzie, said world oil demand growth is expected to average close to 1.1 million barrels per day in 2018 and 2019.
‘This sits against a backdrop of rapid non-OPEC production growth … the strength in non-OPEC production creates pressure on OPEC to curtail its output for 2019 from recent levels, if oil prices are to remain stable,’ Hittle said.