Oil prices slumped up to nearly 8 per cent to the lowest in more than a year on Friday, posting the seventh consecutive weekly loss, amid intensifying fears of a supply glut even as major producers consider cutting output.

Oil supply, led by US producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting on Dec 6.

But this has done little so far to prop up prices, which have dropped more than 20 per cent so far in November, in a seven-week streak of losses. Prices were on course for their biggest one-month decline since late 2014.

A trade war between the world’s two biggest economies and oil consumers, the United States and China, has weighed upon the market.

“The market is pricing in an economic slowdown - they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago, referring to expected talks next week between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires.

“The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand,” Flynn said.

Brent crude futures settled down $3.80 a barrel, or 6.1 per cent at $58.80. During the session, the benchmark dropped to $58.41, the lowest since October 2017.

US West Texas Intermediate crude (WTI) lost $4.21, or 7.7 per cent, to trade at $50.42, also the weakest since October 2017. In post-settlement trade, the contract continued to fall.

For the week, Brent fell 11.3 per cent and WTI posted a 10.8 per cent decline, the largest one-week drop since January 2016.

Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally.

Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 per cent higher than a year ago.

Crude production has soared as well this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million barrels per day (bpd) this year while demand next year was expected to grow 1.3 million bpd.

Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd.

However, Trump has made it clear that he does not want oil prices to rise and many analysts think Saudi Arabia is coming under US pressure to resist calls from other OPEC members for lower crude output.

If OPEC decides to cut production at its meeting next month, oil prices could recover, analysts say.

“We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients.

If OPEC does not trim production, prices could head much lower, potentially depreciating toward $50 a barrel, argues Lukman Otunuga, Research Analyst at FXTM.

VOLATILITY SPIKES TO 2-YEAR HIGH

By the middle of November, commodity trading advisory funds tracked by Credit Suisse prime services had dropped 1.5 per cent on the month, owing to the losses in energy futures and the increased volatility.

Mark Connors, global head of portfolio and risk advisory at Credit Suisse, told Reuters this week that the action among macro and CTA funds reflects a risk-aversion trade, as net long positions have dropped from near five-year highs to roughly even exposure between longs and shorts.

Hedge funds and other money managers cut their net long positions in Brent by 32,263 contracts to 182,569 in the week ended Nov. 20, according to data provided by the Intercontinental Exchange (ICE) on Friday. That’s the lowest net long position since December 2015.

Volatility, a measure of investor demand for options, has spiked to its highest since late 2016, above 60 per cent, as investors have rushed to buy protection against further steep price declines.

The decline in oil prices pulled U.S. energy shares lower. Oil majors Exxon Mobil Corp and Chevron Corp fell more than 3 per cent and were the leading decliners on the Dow Jones Industrial Average Oilfield service providers Schlumberger NV and Halliburton Co also fell nearly 3 per cent.