U.S. light crude for December fell 3 percent, or $1.75, to a low of $55.29 a barrel[18.11.2008]
By Christopher Johnson
LONDON (Reuters) - Oil fell toward $56 a barrel on Monday after a meeting of the Group of 20 major economies ended with few concrete proposals on dealing with global recession.
News that the Organization of the Petroleum Exporting Countries (OPEC) may wait until its meeting on December 17, instead of the end of November, to make a decision on whether to cut production targets again also weighed on prices.
U.S. light crude for December fell 3 percent, or $1.75, to a low of $55.29 a barrel before recovering to $56.23 by 8:42 a.m. EST. Last Thursday, U.S. crude reached a low of $54.67 a barrel, its weakest since January 2007.
London Brent crude fell $0.53 to $53.71.
Reports that a large Saudi Arabian crude oil tanker had been hijacked by pirates off east Africa helped trim early losses, but the market tone remained bearish. Analysts said the lack of any solid action plan from the G20 provided a weak undertone.
"The economic outlook is worrying and no solution has been found short term," said Simon Wardell, analyst at economic consultancy Global Insight. "People are expecting things to get worse as the economic data continues to look poor and, in the absence of anything else, that is helping to push prices lower."
Governments from Washington to Beijing agreed on Saturday to a raft of fiscal and monetary steps to rescue the global economy but it was left to individual governments to tailor responses to their circumstances and troubled industries.
Although the package of economic rescue measures agreed by the G20 countries sought to settle volatile markets and calm consumer anxieties about leaders' ability to work together, the proposals did little to alleviate investors' fears.
OPEC UNCERTAINTY
The worst financial crisis since the 1930s has pushed a growing number of countries into recession, heightening fears of a sharp slowdown in near-term world energy demand and accelerating oil's tumble from its July peak of over $147.
Japan provided more gloomy economic news on Monday with data showing the world's second-biggest economy was in recession.
The Japanese economy shrank 0.1 percent in the third quarter, marking its first recession in seven years.
Oil fell over 2 percent on Friday after news of a euro zone recession and data showing a record decline in U.S. retail sales stirred concerns of a further drop in fuel demand.
OPEC may have to wait until December to take action to reach a preferred oil price range of between $70-$90 a barrel because the effect of its latest cut is not yet clear, the group's president said on Sunday.
Chakib Khelil said he saw a meeting of OPEC ministers in Cairo on November 29 as more of a brainstorming session that might formulate recommendations for action at OPEC's gathering in Algeria on December 17.
Several OPEC members want another production cut in the face of falling revenues. Iran wants OPEC to cut output by a further 1-1.5 million barrels per day (bpd) when it meets in Cairo.
"We suspect that should the cartel put through another 1.0-1.5 million bpd cut ... a good part of the current supply/demand imbalance will be redressed," brokers MF Global said in a note. "However it remains to be seen how quickly this excess crude will be taken off the market."
(Reporting by Christopher Johnson in London and Fayen Wong in Perth; editing by William Hardy)
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