Oil prices plunged by 7% on Friday, falling to its lowest levels in over a year. Oil price concerns have caused the stock market to decline heavily into bear territory over the recent months.
Friday’s decline was pressured by OPEC’s anticipated meeting between oil companies and their allies which is upcoming on December 6th in Vienna. The decline over the past month was led to due to fear in production cuts and slowed global economic growth.
The International benchmark Brent crude dropped by 5.6% or USD 3.52 on Friday. The contract hit USD 58.92, which is its lowest level since October 2017. Meanwhile, the U.S. benchmark West Texas Intermediate fell by 6.6% or USD 3.59 to USD 51.04 on Friday. WTI briefly slide 7% on Friday, according to CNBC.
Since the bearish October, WTI has lost nearly 34% of its value from then, while Brent has fallen approximately 32% in the period as well.
“Oil remains under pressure despite noises from some OPEC countries, most notably Saudi Arabia, about another possible coordinated production cut at the next meeting in two weeks. I do wonder how much lower traders will push it given how likely it is that members will follow through on these threats,” said Craig Erlam, Senior Market Analyst at OANDA, in a note to clients, according to MarketWatch.
Saudi Energy Minister Khalid al Falih said on Thursday that output in November would surpass October’s predictions of 10.6 million barrels per day. Although it is an all-time high, the prediction is slightly under what Falih forecasted in October of 10.7 million barrels per day and as up to 11 million barrels.
According to reports by Bloomberg, the Saudis are pumping a record 10.8 million to 10.9 million barrels per day, but Falih expects demand to be lower in January due to weaker consumption. Falih forecasted that shipments could fall as much as 500,000 barrel per day by December.
Concerns over oil production outlook caused major oil companies shares to fall alongside oil prices. Exxon Mobil (NYSE: XOM) shares fell by 3.2%, Chevron Corporation (NYSE: CVX) shares fell by 3.8%, BP p.l.c. (NYSE: BP) shares fell by 3.95%, ConocoPhillips (NYSE: COP) fell by 3.1%, while Royal Dutch Shell (NYSE: RDS-A) fell by 4.76%.