By Christopher Johnson
LONDON (Reuters) - Oil prices fell to their lowest in more than a year on Friday, on course for their biggest one-month decline since late 2014, even as oil producers considered cutting production to try to stem a rising global surplus.
Oil supply, led by U.S. producers, is growing more quickly than demand and to ward off 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 planned for Dec. 6.
But this has done little so far to prop up prices. The value of a barrel of oil has dropped by around 20 percent so far in November, in a seven-week streak of losses.
Benchmark Brent crude oil fell $3.26 a barrel, or 5.2 percent, to $59.34, its lowest since October 2017. By 1340 GMT, Brent was trading around $59.60, down $3.00.
U.S. light crude lost $4.00, or 7.3 percent, to touch a low of $50.63 a barrel, also the weakest since October 2017.
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"Oil bears have re-asserted their authority," said Tamas Varga, analyst at London brokerage PVM Oil. "The weakness is the continuation of the prevailing bearish sentiment aided a little bit by the stronger dollar."
Volatility has spiked to its highest since late 2016, as investors have rushed to buy protection against further steep price declines.
Volatility, a measure of investor demand for a particular option, has jumped above 60 percent for very bearish near-term sell options, double what it was two weeks ago.
Oil production has surged this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million barrels per day (bpd) this year. Oil demand next year, meanwhile, is expected to grow by 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.
If OPEC agrees to cut production at its meeting next month, oil prices could recover sharply, 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.
But if OPEC does not trim production, prices could head much lower, argues Lukman Otunuga, Research Analyst at FXTM:
"(U.S.) oil has scope to depreciate towards $50 a barrel in the near term."
(Reporting by Christopher Johnson and Amanda Cooper in London, and Henning Gloystein in SINGAPORE; Editing by Emelia Sithole-Matarise and Mark Potter)