Oil markets gave up earlier gains as traders weighed a softer global economic outlook against expected supply cuts from OPEC.
In Singapore, Brent crude futures were quoted at $66.55 a barrel at 0313 GMT, down 24 cents, or 0.4 percent. U.S. West Texas Intermediate was at $57.07 a barrel, off 13 cents, or 0.2 percent.
The pullback came after a sharp run-up in U.S. output. American crude production has climbed by almost 25 percent this year to a record 11.7 million barrels per day, adding to concerns that supply is rising faster than demand.
Those worries were reinforced by broader market weakness. Asian equities fell on Tuesday, following heavy losses on Wall Street the previous day, and traders grew more cautious about the outlook for oil demand.
Portfolio managers have also been cutting exposure. Over the past seven weeks, funds sold the equivalent of 553 million barrels of crude and fuels, the biggest reduction over a similar period since at least 2013. Net long positions now stand at 547 million barrels, less than half the 1.1 billion barrels held at the end of September and well below the 1.484 billion record set in January.
OPEC faces pressure to cut output ¶
OPEC is trying to head off another supply overhang, with members considering a cut of between 1 million and 1.4 million barrels per day. The group is worried about a repeat of the 2014 price slump, when excess production helped drive oil lower.
French bank BNP Paribas said it expected OPEC to approve a supply cut at its next official meeting on 6 December. The bank said Brent could recover to $80 a barrel before the end of the year.
BNP also projected that in 2019 WTI would average $69 a barrel and Brent $76 a barrel.
The International Energy Agency, which represents oil consumers, warned on Monday about the “negative implications” of supply cuts. Analysts have also cautioned that a sharp rise in crude prices could hurt consumption.
Reporting by Henning Gloystein; Editing by Kenneth Maxwell and Christian Schmollinger.
