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Oil falls below $54 ahead of OPEC meeting

Reuters

Fri Nov 28, 2008 3:12am EST

By Maryelle Demongeot

 

SINGAPORE (Reuters) – Oil fell below $54 a barrel on Friday, on course to end the month down more than 20 percent, as OPEC ministers prepared to meet in Cairo to discuss potential further supply cuts as the global economic slowdown crimps oil demand.

The Organization of the Petroleum Exporting Countries, which is to hold an informal meeting on Saturday in Cairo, is struggling to slice output fast enough to keep pace with a recessionary reduction in fuel demand in the West that has sent crude prices down nearly two-thirds since July.

U.S. light crude for January delivery stood at $53.89 barrel by 2:50 a.m. EST, down from $54 in late trading on Thursday.

The NYMEX trading floor was closed on Thursday in the United States for the Thanksgiving Day holiday, though Globex trading continued.

London Brent crude settled 79 cents lower on Thursday at $53.13. It was down 3 cents at $53.10.

“We are waiting for OPEC. Some of the member countries are pushing for a cut but that is not acceptable to consuming countries. It is too early to see if economic sentiment is turning,” said Tetsu Emori, fund manager at Astmax Co Ltd.

Oil prices have fallen by more than a fifth this month, adding to last month’s more than 32 percent fall, which was the biggest monthly drop ever.

Several OPEC delegates have said in the run-up to this latest gathering that it was likely only to measure compliance with the cuts made since September and leave a decision on a further reduction until its next policy-setting meeting on December 17 in Algeria.

But Shokri Ghanem, the head of the Libyan OPEC delegation, said another immediate cut should not be ruled out and warned that oil prices may have further to fall before a rebound.

OPEC has already slashed a combined 2 million barrels daily, 7.3 percent of its production, at two meetings in the past two months.

OPEC seaborne oil exports excluding Angola and Ecuador, will drop 340,000 barrels per day (bpd) in the four weeks to December 13 to their lowest level this year, an oil analyst who tracks future flows said on Thursday.

Roy Mason of British consultancy Oil Movements said in his latest estimate that this was the strongest evidence yet that either OPEC was curbing supply or that demand had been seriously hit by the economic downturn.

Oil fundamentals remain weak, with demand in the United States falling in September to its lowest level for any month in more than a decade.

Total U.S. product demand over the past four weeks was down 6.6 percent from year-ago levels, while September oil demand fell by 12.8 percent versus a year ago to its lowest point in 12 years, the U.S. Energy Information Administration said earlier this week.

(Editing by Ben Tan)

 

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