Oil falls to lowest price in 12 months

Brent Crude has now fallen over 25% since hitting a four-year high in early October, while United States oil has lost 28% since its October peak.

The Indian market too welcomed the fall in worldwide oil prices and opened higher today.

Oil began to climb Monday when Saudi Arabia said that it would boost prices.

The slump in spot prices has turned the entire forward curve for crude oil upside down.

The IEA said in its monthly report that October output rose by 2.6 million barrels a day to 100.7 million barrels as producers heeded warnings that looming US sanctions could mean a loss of Iranian oil to the market and thus lead to higher prices.

The prior estimate was 2.2 million bpd and 1.8 million bpd, respectively. One source said Iran does not want to have a production target in a new agreement as it is facing lower exports due to US sanctions.

Meanwhile, global economic growth is under threat from heightened trade tensions, economic instability in some emerging markets and uncertainty over the UK's exit from the European Union.

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Oil is priced in dollars and the USA currency has been strong of late.

Traders said the selling was an extension of Monday's, which was triggered after US President Donald Trump posted a tweet meant to put pressure on Opec (Organization of the Petroleum Exporting Countries) not to cut supply to prop up prices.

Opec secretary general Mohammad Barkindo said the rise of non-Opec supply was beginning to look "alarming".

The group meets on December 6 to set policy for 2019. The group's strategy is to lower oil inventories to their five-year average. That implies an oversupplied market as it makes it attractive to store oil for later sale. That came after reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption.

In its report released yesterday, OPEC stated: "In 2018, oil demand growth is anticipated to increase by 1.50 mb/d y-o-y, a downward revision from the previous month of 40 tb/d, mainly due to weaker-than-expected oil demand data from the Middle East and, to a lesser extent, China during 3Q18".

Non-Opec oil supply will surge by 120,000 bpd next year and the US, Canada, Kazakhstan and Russian Federation will lead the group of countries contributing to this increase.

Forecasts for a slowing global economy have contributed to the weakening fundamentals in recent weeks.