An employee fills a vehicle with petrol at a fuel station in New Delhi.
London: Oil prices dropped sharply on Tuesday, snapping a four-day winning streak amid concerns about rising global supplies as OPEC weighs a possible cut in production.
Growing fears of an economic slowdown, which saw global stock markets tumble again, added further pressure on crude.
Brent crude futures, the international benchmark for oil prices, were at $65.62 a barrel at 1342 GMT, down $1.17, or 1.77 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $56.19 per barrel, down $1.01, or 1.77 percent.
Oil prices are around a quarter below their recent peaks in early October, weighed down by surging supply, especially from the United States, as well as a slowdown in global trade.
U.S. crude production has soared almost 25 percent this year, to a record 11.7 million barrels per day (bpd).
The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million to 1.4 million bpd. On Tuesday, the OPEC envoy for the United Arab Emirates said it was very likely the group would reduce its output but the exact level had yet to be decided.
“We expect OPEC to agree to a supply cut at its next official meeting on 6 December,” French bank BNP Paribas said.
The bank added that it expected Brent to recover to $80 per barrel before the year-end.
“In 2019, we expect WTI to average $69 per barrel and Brent $76 per barrel,” BNP said.
The International Energy Agency (IEA), however, warned OPEC and other producers of the “negative implications” of supply cuts, with many analysts fearing a spike in crude prices could erode consumption.
The head of the IEA warned of the effects of geopolitical instability on prices.
“We are entering an unprecedented period of uncertainty in oil markets,” Fatih Birol told a conference in Norway.
Amid the uncertainty, financial traders have become wary of oil markets, seeing further downside risk to prices from the growth in U.S. shale production as well as the deteriorating economic outlook.
Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013.
Funds now hold a net long position of just 547 million barrels, less than half the recent peak of 1.1 billion at the end of September, and down from a record 1.484 billion in January.