RTRS: Oil falls below $64 as economy outweighs OPEC
By Fayen Wong
PERTH (Reuters) - Oil fell to a 17-month low on Monday, extending the previous session's $4 loss, as an emergency production cut by OPEC was shrugged off by traders anxious about the onset of a deep global recession.
On Friday, OPEC reached swift agreement to chop production by 1.5 million barrels per day from November 1, but traders said OPEC's action might not be enough to arrest oil's slide of more than 56 percent from a record $147 a barrel in July.
U.S. light crude for December delivery fell 22 cents to $63.93 a barrel by 10:47 p.m. EDT, after touching a 17-month low of $63.67. Prices tumbled by $3.69 on Friday, taking the full-week loss to 10 percent.
London Brent crude fell 30 cents to $61.75.
"The dominating theme continues to be the looming economic slowdown. The length and depth of the slowdown we still don't know, but market is definitely pricing in a recession," said Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.
Signs of a sharp slowdown in Europe and a barrage of profit warnings and job cut news from companies worldwide have intensified fears of deep global recession, which are continuing to dominate investor sentiment after U.S. stocks tumbled and European shares had their lowest close in 5- years on Friday.
Oil had earlier risen nearly $1 at the start of electronic trading, but was later dragged down by falling Asian stocks, which saw Japan's Nikkei index briefly hitting its lowest intraday level since 1982, as investors feared fresh moves expected by central banks this week will not be enough to stave off a prolonged world recession.
News that Japan's Nippon Oil plans a 15 percent cut in November crude oil refining, from a year earlier and data showing China's September oil demand growth was its slowest in 10 months also weighed on oil prices.
All eyes will be on U.S. economic growth data due on Thursday, one day after the Federal Reserve is expected to cut lending rates by half a point, analysts said.
Thursday's advance third-quarter U.S. data is expected to show a 0.5 percent contraction in gross domestic product after 2.8 percent growth in the last quarter.
Oil has plunged as the credit crisis hit economic growth and fuel demand in the United States and other industrial nations. Despite OPEC's Friday decision to cut back on production, oil prices have continued to slide.
Kuwait's oil minister said OPEC was concerned about an oil price fall after it cut output but it would take time to decide if the cut was sufficient, while Venezuelan President Hugo Chavez said OPEC should create a crude price band between $70 and $90 per barrel.
Separately, crude oil speculators on the New York Mercantile Exchange shifted to a net long position while open interest dropped in the week to October 21, the U.S. Commodity Futures Trading Commission reported on Friday.
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
