Oil slid as the International Energy Agency highlighted the difficulty that OPEC and its allies will face in balancing the market as producers meet in Abu Dhabi.
Crude futures reversed earlier gains of as much as 1.1% in New York.
The Organization of Petroleum Exporting Countries faces a daunting task in balancing the market next year as supply from competitors grows, the IEA said in its monthly report.
Producers sought to offer reassurances that they are committed to maintaining pledged production cuts, although talks on deeper curbs will be left to December’s meeting, according to the Saudi oil minister.
Crude has fallen more than 15% from a peak in April as the prolonged U.S.-China trade spat has dented the outlook for global demand. The IEA’s report highlighted the scale of the challenge facing producers as supply is expected to surge in countries not included in the the OPEC+ agreement.
“The market is giving up on OPEC+ being able to support the price,” says Ole Hansen, head of commodities strategy at Saxo Bank A/S. “They can control production but not demand.”
West Texas Intermediate crude for October delivery lost 36 cents, or 0.7%, to $55.39 a barrel on the New York Mercantile Exchange as of 11:28 a.m. in London.
Brent for November settlement fell 59 cents, or 1%, to $60.22 a barrel on the ICE Futures Europe Exchange. The global benchmark traded at a $4.96 premium to WTI for the same month.
Demand for OPEC’s crude in the first half of 2020 will be 1.4 million barrels a day below its August output as production surges from competitors, the IEA said.
The group and its allies gathered in Abu Dhabi to offer reassurances that they are committed to cutting production, while proposing nothing new to address growing concerns that the oil market could tip back into surplus as the global economy slows.
On the demand side, increased tariffs on $250 billion of Chinese goods will be delayed until Oct. 15 from Oct. 1 as a gesture of goodwill after Vice Premier Liu He made the request, and due to the nation celebrating its 70th Anniversary on Oct. 1, Trump said via Twitter.