Oil prices sag on weak stock markets, but traders keep eye on OPEC meeting

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Oil prices sag on weak stock markets, but traders keep eye on OPEC meeting

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell on Thursday as stock markets slid, but trading was tepid in the countdown to an OPEC-meeting expected to result in a supply cut aimed at draining a glut that has pulled down crude by 30 percent since October.

International Brent crude oil futures (LCOc1) were at $61.06 per barrel at 0619 GMT, down 50 cents, or 0.8 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $52.29 per barrel, down 60 cents, or 1.1 percent.

Traders said oil prices were being weighed down by weak global financial markets, which saw stock markets tumble on Thursday.

Barclays (LON:BARC) bank said in its Global Outlook published on Thursday that "investors need to lower their expectations" and that "2019 should be a period of lower returns and higher volatility".

The British bank said that it expected "the global economy to slow over the next several quarters" although it added that "not one major economy is near recession."

The financial downturn has also hit oil markets hard. Since early October, crude oil has lost around 30 percent of its value amid surging supply and fears that an economic downturn will erode fuel demand.

The Organisation of the Petroleum Exporting Countries (OPEC) is meeting at its headquarters in Vienna, Austria, on Thursday to decide its production policy.

Led by Saudi Arabia, OPEC's crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million barrels per day (bpd).

Oil output from the world's biggest producers – OPEC, Russia and the United States – has increased by a 3.3 million bpd since the end of 2017, to 56.38 million bpd, meeting almost 60 percent of global consumption.

The increase alone is equivalent to the output of major OPEC producer United Arab Emirates.

Russia, a major oil producer but not a member of OPEC, will meet with the producer cartel on Friday to discuss production levels, and it is widely expected that a supply cut will be agreed.

"Markets…believe the production cut deal will be in range of 1-1.3 million bpd," ANZ bank said on Thursday.

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