UPDATE 14-Oil drops 9 pct to $49 as OPEC defers cuts

                                
 * U.S. crude settles at lowest level since May 2005
                                
 * OPEC to discuss cutting production later in December
                                
 * NBER declares U.S. recession started December 2007
                                
 * US Nov factory activity weakest since 1981-82 recession
 (Adds Reuters analysts poll in last graph, NBER finding in
paragraph six)
                                
 By Matthew Robinson
                                
 NEW YORK, Dec 1 (Reuters) - Oil plunged more than 9 percent
to $49 a barrel on Monday after OPEC deferred a decision on new
supply cuts at a meeting over the weekend.
                                
 The producer group delayed a decision on output until later
this month as Saudi Arabia and other Gulf members called for
greater compliance with existing cuts agreed to since September
to help stem oil's fall from highs over $147 a barrel struck in
July. [ID:nLT557953]
                                
 U.S. crude <CLc1> settled down $5.15 at $49.28 a barrel,
the lowest settlement since May 2005. London Brent crude
<LCOc1> fell $5.52 to settle at $47.97 a barrel.
                                
 "The major motivation for sellers is the discounting of the
OPEC decision ... but motivation is not hard to find (as) the
elements propelling prices from 2003 on have largely
dissipated," said Mike Fitzpatrick, vice president at MF
Global, in a report.
                                
 Surging demand from emerging economies sent oil and other
commodities on a six-year rally, but prices have tumbled since
July as the economic crisis erodes demand in the United States
and other big developed consumer nations.
                                
 The National Bureau of Economic Research said the U.S.
economy slipped into recession in December 2007 and added the
downturn could be the worst since World War Two.
[ID:nNN0151148]
                                
 Federal Reserve Chairman Ben Bernanke warned on Monday that
the U.S. economy remained under considerable strain and said
policy makers must be ready to take decisive action to protect
jobs and growth. [ID:nN01516053]
                                
 U.S stocks extended losses on Monday after manufacturing
data showing factory activity fell in November to its weakest
level since the 1981-1982 recession increased worries about the
world economic slump. [ID:nN01514438]
                                
 "The OPEC meeting last weekend shows you that there's not a
lot the group can do to stop the free-fall in oil prices. On
top of that, the latest U.S. manufacturing data is playing into
the market psychology," said Phil Flynn, analyst for Alaron
Trading in Chicago.
                                
 "The weakness in the manufacturing sector foretells a bad
demand picture for oil."
                                
 OPEC's secretary general said the cartel is ready to cut
production by a significant amount when the group next meets on
Dec. 17 in Algeria. [ID:nDAH131976]
                                
 Saudi Arabian Oil Minister Ali al-Naimi told Saudi-owned
al-Hayat newspaper that OPEC would not need to make a further
cut in oil supply when it meets in Algeria if producers comply
with previous curbs and fuel stocks decline. [ID:nLU157636]
                                
 The group has agreed to trim 2 million barrels per day
(bpd) from production since September.
                                
 Saudi Arabia over the weekend said $75 a barrel would be a
"fair" price for oil, the first time in years that the world's
biggest exporter has identified a target for crude prices.
[ID:nLT606471]
                                
 A Reuters poll of analysts ahead of U.S. weekly government
data to be released on Wednesday forecast a 1.8 million barrel
build in crude stocks in the week to Nov. 28, a 700,000 barrel
rise in distillate inventories, and a 1.4 million barrel
increase in gasoline stocks.
 (Reporting by Matthew Robinson, Rebekah Kebede and Gene Ramos
in New York, Jane Merriman in London, Maryelle Demongeot in
Singapore and Osamu Tsukimori on Tokyo; Editing by Jim
Marshall)