Wednesday 2 January 2019 8:04 am

Oil prices fall as oversupply fears continue despite planned cuts

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Oil prices fell by roughly one per cent this morning as planned output cuts fail to allay fears about a global economic slowdown.

Brent crude oil, the global benchmark, slipped to $53.19 a barrel, down roughly one per cent on its closing price for 2018.

West Texas Intermediate also fell more than two per cent to $44.97 a barrel. Both benchmarks are down roughly 40 per cent from their highs in October.

The latest falls come after a difficult year for oil markets, as prices continue to plunge amid fears of a slowing global economy and record production in the US.

Opec, the international oil organisation, has pledged to cut output in a bid to stabilise prices. The cut is set to come into effect this month.

“Slower global growth is clearly a strong headwind for oil, but I wonder whether the doom and gloom is a little overdone and with Opec seemingly committed to bringing balance back into the market, the bottom may not be far away,” said Craig Erlam, senior market analyst at Oanda.

“Traders may simply be waiting for some evidence that more output cuts will have the desired effect in a world where the US is increasing its dominance thanks to a booming shale industry.”

The planned cuts are expected to lift prices to roughly $60 a barrel, according to analysts.