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Oil falls to near $53 as OPEC doesn't cut output

(Agencies)
Updated: 2008-12-01 15:57

SINGAPORE -- Oil prices fell to near $53 a barrel Monday in Asia after OPEC declined to cut production at an informal meeting in Cairo on Saturday.

A file photo of a station attendant filling a car in Tirana in Albania. Oil prices fell to near $53 a barrel Monday in Asia after OPEC declined to cut production on Saturday. [Agencies]

Light, sweet crude for January delivery was down $1.07 to $53.36 a barrel, after falling to as low as $52.96, in electronic trading on the New York Mercantile Exchange at mid-afternoon in Singapore. The contract settled down a penny at $54.43 on Friday.

Saudi Oil Minister Ali Naimi said Saturday that the Organization of Petroleum Exporting Countries will "do what needs to be done" to shore up falling oil prices when the group meets December 17 in Algeria, but for now it was "too early."

The comments came after Saudi King Abdullah told the Kuwaiti newspaper Al-Seyassah in an interview published Saturday that oil should be priced at $75 a barrel.

"They need to cut a lot to get the price to $75," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Demand is disappearing underneath them fast."

Iranian Oil Minister Gholam Hossein Nozari was quoted as saying Sunday that the market was oversupplied by around 2 million barrels per day and that production should be cut by that amount.

OPEC, which accounts for about 40 percent of global supply, reduced output quotas in October by 1.5 million barrels a day.

"It will be difficult to get everyone to comply to a drastic cut," Shum said. "The market has assumed there will be a substantial OPEC cut so if they don't, there will be significant downward pressure on prices."

Investors will be looking this week for signs of how bad the global economic slowdown may be, particularly US retail sales at the start of the holiday shopping season.

In other Nymex trading, gasoline futures fell 1.70 cents to $1.19 a gallon. Heating oil dropped 2.39 cents to $1.70 a gallon while natural gas for January delivery rose 5.0 cents to $6.56 per 1,000 cubic feet.

In London, December Brent crude fell $1.20 to $52.29 on the ICE Futures exchange.