Oil prices tumble as output climbs

OIL PRICES fell on Tuesday after reports of swelling inventories and forecasts of record US and Russian output combined with a sharp sell-off in stock markets as the outlook for global growth deteriorated.

US crude oil dropped $2.04, or 4.1 per cent, to a low of $47.84, its weakest since September 2017. It recovered to around $49.28, down 60 cents.

North Sea Brent lost $2.41, or 4.0 per cent, to $57.20, a 14-month low. Brent last traded around $59.01, also 60 cents lower.

Both oil benchmarks have shed more than 30 per cent since early October due to swelling global inventories.

World stock markets tumbled on Tuesday as fears about a slowing global economy gripped investors.

The Organization of the Petroleum Exporting Countries and other oil producers agreed this month to curb production by 1.2 million barrels per day (bpd), equivalent to more than 1 per cent of global demand, in an attempt to drain tanks and boost prices.

But the cuts won’t happen until next month and meanwhile production has been at or near record highs in the United States, Russia and Saudi Arabia, undermining spot prices.

Russian oil output hit a record 11.42 million bpd this month, an industry source said.