Oil prices hit 2018 low as global supplies rise

Donald Trump has called on Opec to reduce prices by pumping up supplies

Saudia Arabia has indicated the its production has hit a record high of more than 10.7m barrels a day (REUTERS)

Oil prices have dropped to an almost one-year low as a global supply glut drags on the market.

Brent crude oil was trading at $61.87 per barrel on Friday morning, marking a 29 per cent drop from a four-year high of $86.29 just over a month ago. US benchmark WTI was down 2.6 per cent in early trading at $53.20.

Prices have dropped after Saudi Arabia indicated that production has neared record levels, as energy minister Khalid Al-Falih said production had pushed past 10.7m barrels a day, while US crude stockpiles are also increasing.

Donald Trump has called on Opec to reduce prices by ramping up production, however, it is expected that the oil cartel will cut output in the coming months. Mr Al-Falih has said that demand for Saudi supply may be lower in January than in December.

Jasper Lawler at London Capital Group said: “Swings of over 1 per cent have been the norm in the latter part of this week and volatility has been high since the beginning of November. This highlights just how jittery the oil market is right now.

“US inventories hitting their highest level in 11 months fuelled concerns over a global crude glut amid a worsening economic outlook.

"The fact that oil traders shrugged off expectations that Opec will start withholding supply in 2019 to rein in a glut reflects just how concerned oil traders are over the future outlook.”

Hong Sungki, a commodities trader at Korea’s NH Investment & Securities, said: “Prices have taken a dive as Trump continues to put pressure on OPEC and Saudi Arabia to create a low-price environment, and that has coupled with increasing American stockpiles. A potential game-changer will be what Opec agrees to do in terms of supply.”