* Oil falls nearly $4 a barrel
* OPEC agrees to cut output 1.5 million bpd
* Global stock markets tumble
* U.S. highway miles traveled fell the most ever in August
(Updates prices, adds U.S. Transportation Dept figures)
By Timothy Gardner
NEW YORK, Oct 24 (Reuters) - Oil dropped nearly $4 a barrel
on Friday as concerns about a global recession and slowing fuel
demand took the steam out of an OPEC agreement to cut output.
The Organization of the Petroleum Exporting Countries
agreed at an emergency meeting in Vienna to take 1.5 million
barrels a day of crude, about 5 percent of its supply, off the
world market.[]. Saudia Arabia's Oil Minister Ali
al-Naimi said the reduction would take effect from Nov.1.
U.S. light crude for December delivery <CLc1> settled $3.69
weaker at $64.15 a barrel, after falling as low as $62.65, its
lowest since May 2007.
It has fallen more than $40 a barrel in a month.
London Brent crude <LCOc1> settled down $3.87 at $62.05.
Traders said OPEC's action might not be enough to arrest
oil's slide of more than 56 percent from a record $147 a barrel
in July. Drops in motor fuel demand amid the economic downturn
have been dramatic.
"Already we've seen demand destruction of 2 million barrels
per day. I'm not convinced this cut will be enough to stop the
slide," said Rob Laughlin, at broker MF Global.
Signs of a sharp slowdown in Europe and a barrage of profit
warnings and job cut announcements from companies around the
world intensified fears of deep global recession. []
The U.S. Energy Information Administration said this week
that oil products demand in the world's biggest energy consumer
during the previous four weeks was 18.7 million barrels per
day, down 8.5 percent from a year ago.
Meanwhile, the U.S. Transportation Department said
motorists drove 15 billion miles (24 billion km) less in August
than they did a year earlier for the biggest decline in any
month ever recorded. []
NERVOUS MARKETS
Oil has plunged as the credit crisis hit economic growth
and fuel demand in the United States and other industrial
countries.
"We believe this week will mark the start of a new quota
reduction cycle by OPEC and it will continue through 2009,"
Deutsche Bank analyst Michael Lewis said in a note.
"However, we believe production cuts will not rescue the
oil price," he said. The bank expects U.S. crude oil prices
will hit $50 a barrel next year.
The International Energy Agency, which advises
industrialized consumer countries, was critical of OPEC's cut.
"It's not a helpful decision because markets are quite
nervous," Eduardo Lopez, senior analyst at the IEA's oil market
division said.
U.S. stocks tumbled and European shares had their lowest
close in 5-1/2 years, continuing a global collapse in equities
as investors fearing a long and deep worldwide recession cashed
out of risky assets. [].
"OPEC actions notwithstanding, the market is clearly being
influenced more by the apocalyptic psychology currently
pervading all markets," said Mike Fitzpatrick, vice president
at MF Global in New York.
Gold pared losses after sliding 5 percent in early trade,
as the dollar retreated from highs against the euro and
investors took advantage of lower prices to buy into the metal.
[]
(Additional reporting by Jane Merriman and David Sheppard in
London, Fayen Wong in Perth, and Gene Ramos in New York;
Editing by David Gregorio)
