The oil falls to the lowest since the end of 2017 on emerging supply gaps, OPEC is expected to cut

SINGAPORE (Reuters) – Oil prices dropped to its lowest since the end of 2017 on Friday in bad trade, offset by an emerging raw supply overhang and a darker economic outlook.

In order to counter bulge supply, the Organization of Petroleum Exporting Countries (OPEC) is expected to start reluctant production after a meeting scheduled for 6 December.

International benchmark Brent crude futures LCOc1 dropped its lowest since December 2017 to $ 61.52 per barrel before resuming to $ 62.13 by 0741 GMT. It was 47 cents, or 0.8 percent below their last closing.

US West Texas Intermediate (WTI) crude futures CLc1 decreased 2.3 percent to $ 53.38 per barrel. Prices fell earlier to as low as $ 52.82, just 5 cents on $ 52.77 level reached on Tuesday, which was the lowest since October 2017.

During the run, Brent and WTI price volatility jumped in November to approaching levels that have not been seen since the market decline in 2014-2016, and before the financial crisis 2008-2009.

(Graph: Oil price volatility has increased, tmsnr.rs/2PO4r3S)

Divergence between US and international commodities comes as an increasing North American supply, clogging the system and depressing prices there, while global markets are somewhat tighter, partly due to reduced exports from Iran due to recently imposed US sanctions.

Overall, global oil supply has increased this year, with the three largest producers – the United States, Russia and Saudi Arabia – pumps over one third of global consumption, which is around 100 million barrels per day (bpd).

"The market is currently translated," said American investment bank Jefferies on Friday, adding that "a trained market has a hard time putting a (price) floor."

High output comes as demand outlook weakens the back of a global economic downturn.

Shanghai shares. SSEC fell most in five weeks on Friday, by 2.5 percent, among concerns about China's economic growth and doubts about the chances of President Xi Jingping and US President Donald Trump to achieve a de-escalation in Chinese-American trade war when they meet in the next week.

Oil prices have fallen by about 30 percent since the last peaks in early October when global output began to exceed consumption in the fourth quarter of this year and ended a deficit that started in the first quarter of 2017, according to data in refinitory eikon .

Adjustment to lower demand, top exporter Saudi Arabia said Thursday that it could reduce the offer.

"We do not want to sell oil that customers do not need," said Saudi energy minister Khalid al-Falih to journalists.

Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent supply gluten.

The group officially meets on 6 December to discuss supply policy.

US Bank Morgan Stanley said there was "a much greater likelihood that OPEC reached an agreement to balance the market in 2019" yet, adding that this will probably support oil prices "at the highest $ 50 in at least close to sight ". [19659004] (GRAPHIC: Global Crude Oil Supply and Demand Balance, ts.nr/2PKtzIy)