22 Nov 2008

Oil rallies after near $US100 drop since July

7:03 am on 22 November 2008

Oil prices steadied on Friday, after falling more than 7% the day before, as stock markets recovered from early lows caused by continuing economic gloom.

US crude fell 13 US cents to $US49.29 a barrel during trading on Friday, after earlier hitting $US48.25, its lowest level in three and a half years.

London Brent crude gained 53 US cents to $US48.61 a barrel.

Slumping demand in the United States and other top oil consuming nations has sent crude prices plunging from record highs above $US147 a barrel in mid-July.

On Thursday, oil fell more than 7% on gloomy economic data, to settle at its lowest since May 2005.

JP Morgan said on Friday it expected world oil demand in 2009 to decline by 500,000 barrels per day as the global credit crunch continues to rack the world economy.

Members of the Organization of the Petroleum Exporting Countries will meet in Cairo next week, but may not take any decision to reduce output to defend prices.

"In Cairo we will not have the complete data about the market," OPEC President Chakib Khelil said. "It's very possible that we will not take a decision until we will see the impact.

This impact will not likely be seen until December."

OPEC agreed in October to cut output by 1.5 million barrels per day from 1 November but the move has failed to stem the decline in oil prices.

US stocks recovered slightly after falling into negative territory on Friday as shares of financials, including Citigroup, declined and investors worried about the deepening economic slump.