* Oil settles lowest since Feb. 2004
* Saudi Arabia pledges output cut from January
(Updates prices at settlement, detail on 6-day fall)
By Edward McAllister
NEW YORK, Dec 19 (Reuters) - Oil fell over 6 percent on
Friday, as fears of economic slowdown weighed heavier than
proposed production cuts by the world's major oil exporters.
U.S. light crude for January delivery <CLc1>, which expired
Friday, settled down $2.35 at $33.87 a barrel, the lowest since
Feb. 10, 2004, when it ended at the same level.
The more active February contract <CLG9> settled up 69
cents at $42.36 a barrel with cuts in OPEC production expected
to take hold in that month.
London Brent crude <LCOc1> gained 64 cents, settling at
$44.00.
Friday marks the sixth consecutive day of falls in oil, off
more than 29 percent from the $47.98 seen when prices last rose
on Dec. 11.
Oil prices have fallen more than $100 from their peak above
$147 in July as a global economic downturn ripped into global
oil demand, and looked set for one of their biggest weekly
declines for years.
Industry forecasters predict that global oil demand will
contract for the first time since 1983.
Pledges by the Organization of the Petroleum Exporting
Countries (OPEC) to cut output by 2.2 million barrels per day
(bpd) -- the largest ever reduction by the producer group --
failed to support January prices.
"The market is signaling that it is taking a look at the
OPEC cut and recognizing that is more likely to be evident in
February," said Gene McGillian, analyst at Tradition Energy in
Stamford, Connecticut.
"The Feb contract has not been able to crack $40 yet, but
if inventories and refinery use continue to drop then pressure
will resume," he added.
However, many traders doubt OPEC, whose third production
cut since September has brought its total reduction to more
than 4 million bpd or 5 percent of world supply, will fully
implement the agreed cuts.
"We believe that full implementation of the cuts is
unlikely," Goldman Sachs analysts said in a note to clients.
OPEC kingpin Saudi Arabia's Oil Minister Ali al-Naimi,
speaking in London on Friday, said the kingdom would be pumping
less oil in January and would be at its new output target in
line with the group's latest cut.
"BITE THE BULLET"
That reassurance appeared to be having some impact on the
market in late European trade on Friday.
"From a credibility standpoint, OPEC has no choice but to
bite the bullet for the next few months," said Jonathan
Kornafel, Asia Director of Hudson Capital Energy.
"Until traders see a sustained drop-off in the rate of
demand destruction, the market will have a hard time
establishing a floor."
OPEC President Chakib Khelil said on Friday he believed oil
prices had found a floor around current levels. []
"I don't believe there is any reason for it to fall any
further. I don't see it going lower," he told Reuters in
London.
(Additional reporting by Robert Gibbons in New York and
Christopher Johnson in London; Editing by Marguerita Choy)
