The Philadelphia Energy Solutions oil refinery. Picture: REUTERS
The Philadelphia Energy Solutions oil refinery. Picture: REUTERS

Singapore — Oil markets were trading cautiously on Tuesday, with mixed signals coming from top exporter Saudi Arabia ahead of an Opec meeting in Austria next week.

International Brent crude oil futures briefly dipped below $60 a barrel before rising back to $60.50 at 4.16am GMT, 2c above their last close.

US West Texas Intermediate (WTI) crude futures were at $51.48 a barrel, down 15c.

Saudi Arabia raised oil production to a record high in November, an industry source said on Monday, pumping 11.1-million to 11.3-million barrels a day during the month.

Oil prices have lost almost a third of their value since early October, weighed down by an emerging supply overhang and widespread financial market weakness.

“Oil is on a slippery slope,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.

Ruecker said the weak sentiment “follows a surprisingly swift and pronounced change in the market mood from shortage fears to glut concerns”, while the world economy was also slowing down.

Traders said they were awaiting the outcome of the Group of 20 (G20) meeting in Buenos Aires and also the result of a meeting of producer cartel Opec.

The leaders of the G20 countries, which make up the world’s biggest economies, meet on November 30 and December 1, with the trade war between Washington and Beijing atop the agenda. But with top crude producers Russia, the US and Saudi Arabia all present, oil policy is also expected to be discussed.

The G20 meeting will be followed by Opec’s annual meeting at its headquarters in Vienna on December 6, when the producer cartel will discuss its output policy together with some non-Opec producers, including Russia.

In favour of low oil prices for consumers, U.S. President Donald Trump has put pressure on his political ally Saudi Arabia, Opec’s de-facto leader, not to cut production.

Despite this, most analysts expect Opec to start withholding supply again soon.

“We suspect that producers will start to withhold exports in the coming months, putting a floor under prices,” said Capital Economics in a research note, adding that it expected Brent to be around $60 a barrel by end-2019.

Fereidun Fesharaki, chair of energy consultancy FGE, warned that a failure by Opec and Russia to significantly cut supply would mean crude prices would “fall further, perhaps to Brent at $50 a barrel and WTI of $40 a barrel or less”.