By Jane Merriman LONDON (Reuters) - Oil fell more than $3 to below $51 a barrel on Monday after OPEC decided to wait until mid-December to make a further cut in output to try to defend sagging prices. U.S. light crude for January delivery was down $3.70 at $50.73 a barrel by 10:04 a.m. EST. Oil had settled at $54.43 on Friday after a shortened post-Thanksgiving holiday session. On November 21, it touched a three and half year low of $48.25. London Brent crude was $3.55 lower at $49.94 a barrel. "The markets are discounting OPEC's decision to stand pat by selling off," said Edward Meir, analyst at broker MF Global. "When it comes to calibrating supply and demand to fit the new post-September economic realities, OPEC seems to be in a state of denial," he said in a research note. Oil is down by almost two-thirds from a peak of more than $147 a barrel in July. Prices fell almost 20 percent in November and 32 percent in October, their biggest monthly fall ever, despite OPEC's around 2 million barrels per day cutbacks. A global economic slowdown that has tipped a growing number of countries into recession has caused sharp falls in oil demand. U.S. shares fell steeply on Monday, illustrating the depth of investor concern over the economic downturn. But OPEC's Gulf producers want to see strict compliance with the producer group's existing output curbs of 2 million barrels per day (bpd) before agreeing to any more. "FAIR PRICE" "I was a little surprised they didn't announce anything stronger," said Simon Wardell, senior oil analyst at IHS Global Insight. "I think this (meeting) was to underline that everyone really needs to work together." In Cairo, OPEC ministers discussed how much more they needed to cut. Most, including Gulf producers led by Saudi Arabia, saw the need to trim another 1 to 1.5 million bpd. The Organization of the Petroleum Exporting Countries (OPEC) meets next in Algeria on December 17. OPEC Secretary General al-Badri told reporters in Tehran on Monday that the group was prepared to cut then: "It will be a good amount, a good quantity," without naming a specific figure. "It seems to us that the group remains in broad agreement as to their concerns regarding inflated inventory levels and low prices," said Tim Evans, analyst at Citi Futures Perspective. "The question seems to be more regarding the timing of further action rather than disputes over what sort of action to take." Saudi Arabia on Saturday pointed to $75 a barrel as a "fair price" for oil, the first time in years that the world's biggest exporter has identified a target for crude prices. Saudi Oil Minister Ali al-Naimi in Cairo cited this price as necessary to keep more expensive new projects at the margins of world supply on track. "I believe $75 is the price for the marginal producer," he told reporters in Cairo. On Sunday he told the Saudi-owned al-Hayat newspaper the effect of OPEC's existing cuts was still not clear. (Additional reporting by Maryelle Demongeot in Singapore and Osamu Tsukimori on Tokyo; editing by James Jukwey)

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