* Oil dives $2 as OPEC resists further cuts, for now
* OPEC pledges to enforce strict compliance, meet May 28
* Focus shifts to economy, U.S. industrial output on Mon
(Adds details, analyst's comments)
By Fayen Wong
PERTH, March 16 (Reuters) - Oil slumped 4 percent to $44 a
barrel on Monday as traders questioned whether OPEC's decision
to enforce better compliance with previous curbs rather than
make new production cuts was enough to offset eroding global
demand.
While top producer Saudi Arabia had signalled a week ago
that it wanted stricter adherance to the cartel's previous 4.2
million barrel per day (bpd) cuts rather than additional formal
restraints, other members had campaigned for explicit action
now to avert a further rise in already swollen oil inventories.
At its meeting on Sunday in Vienna, OPEC agreed to enforce
existing curbs more strictly and said it would meet again at
the end of May to review progress, surprising some traders who
had expected the group's more hawkish members to prevail.
"Oil prices are being dragged down after OPEC surprised the
market by leaving output targets unchanged ... Pent-up
expectations of a production cut into the meeting are naturally
being unwound," research firm Informa Global Markets said in a
report.
U.S. light crude for April delivery <CLc1> fell $1.84 to
$44.41 a barrel by 2357 GMT, after having earlier dropped as
low as $43.85. London Brent crude <LCOc1> fell $1.43 to $43.50.
OPEC's adherence with previous cuts has been estimated at
about 80 percent and full compliance would take away more than
800,000 barrels per day [].
OPEC said its decision reflected concern for the economy
and a belief supply curbs so far have begun to remove the
excess from oil markets, and U.S. Energy Secretary Steven Chu
said he was pleased with the outcome.
"With OPEC having made its decision, the market's next
focus will be U.S. economic data. We saw some weak data last
week but they had been pretty much ignored," said Mark Pervan,
a senior commodities analyst at the Australia & New Zealand
Bank.
A heavy calendar of economic reports is on tap for the week
and negative surprises from any of the releases -- such as
Monday's industrial production data or Tuesday's housing start
figures -- could drag oil prices lower still, analysts said.
Oil prices have tumbled about $100 from record highs over
$147 a barrel in July 2008 as the global economic crisis weighs
on energy demand, but it has recovered from levels below $35 a
month ago.
An OPEC report released Friday showed world oil demand
contracting faster than expected, and the International Energy
Agency lowered its oil demand forecast by more than a million
barrels per day for 2009. [] []
Still, analysts said gains in the equities market could
offer some support for oil prices as traders might adopt a more
favourable view of future oil demand on the heels of better
economic guidance.
Asian shares were set to gain on Monday on hopes that
struggling U.S. banks are stabilising and after G20 finance
ministers promised to use all available tools to fight the
global recession at a meeting over the weekend.
(Reporting by Fayen Wong; Editing by Kim Coghill)
