Singapore: Oil fell towards $53 a barrel on Friday as Opec ministers prepared to meet in Cairo to discuss potential further supply cuts as the global economic slowdown eats into 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.
US light crude for January delivery fell to $53.53 barrel by 7:40am, having fallen by more than $1.00 earlier, and down 91 cents from its settlement on Wednesday. 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 48 cents at $52.65.
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 17 December 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% 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 13 December 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 US product demand over the past four weeks was down 6.6% from year-ago levels, while September oil demand fell by 12.8% versus a year ago to its lowest point in 12 years, the US Enery Information Administration said earlier this week.