Oil falls below $54 in Asia ahead of OPEC meeting

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(Agencies)
Updated: 2008-11-28 17:05

SINGAPORE -- Oil prices fell below $54 a barrel Friday in Asia as a gloomy outlook for global crude demand overshadowed hopes OPEC will announce a production cut this weekend.

Light, sweet crude for January delivery was down 95 cents to $53.45 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. Trading was closed Thursday in the US for the Thanksgiving holiday.

Oil prices have fluctuated between $50 and $55 this week, pausing after fall of over 60 percent since reaching a record $147.27 in mid-July.

Grim economic data this week pointing to a severe recession in the US in the fourth quarter and signs of growth slowing around the world have kept prices from rebounding further.

"The drop-off in demand is going to continue," said Jonathan Kornafel, Asia director at market maker Hudson Capital Energy in Singapore. "There's no reason for the market to rally."

Oil will likely trade below $50 a barrel and could test the $40 level by the end of the year, Kornafel said.

Investors will be watching whether the Organization of Petroleum Exporting Countries reduces output quotas at an informal meeting Saturday in Cairo. Venezuelan Oil Minister Rafael Ramirez on Wednesday called on OPEC to cut production by 1 million barrels a day.

OPEC Secretary-General Abdullah al-Badri on Thursday said the group should not panic in the face of falling oil prices. Russia also indicated this week it may join OPEC in lowering output.

"I don't expect a cut out of the Cairo meeting, but I do expect a 1.5 million barrel cut at their December meeting," Kornafel said. "I wouldn't be surprised to see Russia get in with OPEC either."

In other Nymex trading, gasoline futures was steady at $1.18 a gallon. Heating oil dropped 2.76 cents to $1.71 a gallon while natural gas for January delivery slid 16.9 cents to $6.71 per 1,000 cubic feet.

In London, December Brent crude rose 9 cents to $53.22 on the ICE Futures exchange.