* OPEC cut does little to stem price fall
* U.S. crude inventories rise, demand outlook clouds over
By Annika Breidthardt
SINGAPORE, Dec 18 (Reuters) - Oil steadied around $40 a
barrel on Thursday, near its lowest in more than four years, as
further evidence of slowing demand trumped OPEC's biggest ever
production cut.
U.S. light crude for January delivery <CLc1>, which expires
on Friday, fell 2 cents to $40.04 a barrel by 0128 GMT, after
falling to $39.19 earlier in the session, the lowest since July
2004.
London Brent crude for February <LCOc1> rose 2 cents to
$45.55.
The Organization of the Petroleum Exporting Countries,
eager to build a floor under dipping prices, announced on
Wednesday it would cut 2.2 million barrels daily of output
starting Jan. 1, slightly more than expected.
It comes on the heels of 2 million barrels a day (bpd) of
cuts since September, but instead of boosting oil prices, it
deepened the gloom over demand.
With top forecasters predicting the first decline in world
energy use since 1983, OPEC's move may not be enough to halt
oil's almost three-quarters dive since its July all-time peak
above $147.
"Countries other than the Saudis are going to have
difficulty to comply with this cut. Those oil producing
countries, if they want to survive, they have to produce, even
at $40 oil," said Tetsu Emori, fund manager at Astmax Co Ltd in
Japan.
"Prices have to head lower, now that we are through $40. As
long as demand continues to weaken, prices will weaken too."
A prolonged period of cheap prices could slow new
investment, crimping supply, a stark turnaround just months
after worries that high prices were eating into demand.
Traders also took their cue from U.S. crude oil and refined
fuel stocks, which rose last week as imports of oil products
increased, while domestic refiners curbed output rates in the
light of soft demand.
Commercial crude oil stocks in the United States were up
500,000 barrels to 321.2 million, the Energy Information
Administration said. [].
It also said oil demand in the world's top consumer was
expected to grow by only 1 million bpd, or 0.2 percent, over
the next two decades, as higher vehicle fuel standards and
increased use of renewable fuels stifle petroleum consumption.
[]
Americans are likely to travel less for the Christmas
holiday period for the first time since 2002, travel and auto
group AAA said. []
U.S. shares fell on Wednesday, prompting Japan's Nikkei to
inch lower as well on Thursday, as investors wondered what
tools were left to tackle the year-long recession after the
Federal Reserve on Tuesday cut rates to their lowest on record.
The cut has sent the U.S. dollar tumbling against major
currencies, hitting the weakest in more than 13 years against
the yen on Wednesday.
(Reporting by Annika Breidthardt; Editing by Michael
Urquhart)
