SINGAPORE (Reuters) – Oil prices slumped to 2018 lows on Friday in choppy trading, pulled down an emerging crude supply overhang amid a bleak economic outlook.

The fall came even as markets expect the Organization of the Petroleum Exporting Countries (OPEC) to start withholding supply after a meeting planned for Dec. 6.

International benchmark Brent crude oil futures hit their lowest since December 2017 at $61.52 per barrel, before recovering to $61.88 by 0622 GMT. That was still 72 cents, or 1.2 percent below their last close.

U.S. West Texas Intermediate (WTI) crude futures slumped by 2.5 percent, to $53.29 a barrel, after coming within 5 cents of an October 2017 low reached earlier in the week.

Amid the plunge, Brent and WTI price volatility has jumped in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009.

(Graphic: Oil price volatility has surged – tmsnrt.rs/2PO4r3S)

The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter, in part because of reduced exports from Iran due to newly imposed U.S. sanctions.

Overall, however, global oil supply has surged this year, with the top-three producers – the United States, Russia and Saudi Arabia – pumping more than a third of global consumption, which stands at around 100 million barrels per day (bpd).

“The market is currently oversupplied,” said U.S. investment bank Jefferies on Friday, adding that “an oversupplied market has a difficult time setting a (price) floor.”

High production comes as the demand outlook weakens on the back of a global economic slowdown.

Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Refinitiv Eikon.

Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply.

“We will not sell oil that customers don’t need,” Saudi Energy Minister Khalid al-Falih told reporters.

Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut.

The group officially meets on Dec. 6 to discuss its supply policy.

U.S. bank Morgan Stanley said it saw “a far greater probability that OPEC reaches an agreement to balance the market in 2019” than not, adding that this would likely support oil prices “in the high-$50s, at least near term.”

(Graphic: Global crude oil supply & demand balance – tmsnrt.rs/2PKtzIy)

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