2018.11.2015:23:00UTC+00Oil Plunges Sharply, Settles At Over 1-year Low

Oil prices plunged sharply on Tuesday as rising concerns about global economic outlook outweighed optimism about production cuts by OPEC and allies.

With the U.S.-China trade dispute threatening to hurt global economic growth, demand for crude oil is expected to drop significantly in the near term. Brexit uncertainty and Italy's debt problems are also driving oil prices lower.

Russia's energy minister Alexaner Novak has reportedly remarked that the oil market alliance will monitor supply and demand in the coming weeks before deciding on production levels.

Eight successive weeks of increases in U.S. crude inventories and data showing an increase in U.S. oil rigs count are also hurting the commodity. According to recent data, U.S. is producing a record 11 million barrels of crude per day, up 18% since the start of this year.

Crude oil futures for January ended down $3.77, or 6.6%, at $53.43 a barrel, the lowest settlement price in about 13 months.

On Monday, crude oil futures ended up $0.52, or 0.9%, at $57.20 a barrel.

The OPEC is expected to discuss production cuts when it meets on December 6. It is expected that the members will push for a supply cut of 1 million to 1.4 million barrels per day.

Though it is almost certain that the group will resort to a production cut, the exact quantum of cut will be decided only at the meeting.

On U.S.-China trade war front, U.S. President Donald Trump said recently that China wants to make a deal on trade with the United States, but any pact has to be reciprocal. This has raised hopes that the two countries may agree on a deal when Trump and Chinese President Xi Jinping meet in Argentina later this month.

However, comments from U.S. Vice President Mike Spence that the U.S. is unlikely to back down from its trade dispute, until China changed its ways, raise concerns that a quick solution to trade disputes between the two countries may not come about anytime soon.

Later today, the American Petroleum Institute will release its weekly oil report. The official crude inventory data from U.S. Energy Information Administration will be out at 10:30 AM on Wednesday.