* Oil settles at lowest level since January 2007
* EIA slashes demand forecast, IEA expects further cuts
* OPEC officials call for further cuts
(Updates prices)
By Matthew Robinson
NEW YORK, Nov 12 (Reuters) - Oil fell 5 percent to $56 a barrel
on Wednesday as the U.S. government hacked its global demand growth
forecast again due to the slumping global economy.
OPEC officials, concerned about the oil's steep drop from record
highs over $147 a barrel per day (bpd) in July, said the cartel
could possibly decide by the end of the month to cut production
again to raise prices. []
U.S. crude <CLc1> fell $3.17 to settle at $56.16 a barrel, the
lowest settlement since Jan. 29, 2007. London Brent crude <LCOc1>
traded down $3.34 to settle at $52.37 a barrel.
The U.S. Energy Information Administration chopped its 2009
output outlook by 740,000 bpd, with total demand expected to average
85.93 million bpd next year, compared with estimates of 85.89
million bpd for this year. []
Demand in the United States, the world's biggest consumer of
oil, was expected to fall by more than 1 million bpd for the first
time since 1980 this year, the EIA said.
Earlier, the International Energy Agency, which advises many of
the biggest economies on energy policy, said a slowing world economy
may force it to cut its oil demand forecast again when it releases
its latest monthly report on Thursday.
The economic crisis had already led the IEA, to cut its
assumption for 2008 world oil demand growth to the lowest rate in 15
years at just 440,000 barrels per day.
"We are likely to cut demand ... because the IMF changed its
projections on the world economy very dramatically," Nobuo Tanaka,
head of the IEA, told Reuters.
The IEA comment reinforced fears among traders and analysts that
the ferocity of the recession sweeping through many of the world's
biggest economies has not yet been fully factored into projections
for oil demand.
U.S. stocks extended losses on Wednesday after U.S. Treasury
Secretary Henry Paulson said his department would consider capital
needs of non-bank financial institutions, renewing concerns about
the scope of problems in the U.S. economy. [].
"Fear global recession is worsening day by day is driving this
market down," said Rob Laughlin, senior oil analyst at MF Global.
"Demand for oil is deteriorating week by week."
OPEC REDUCTION
OPEC President Chakib Khelil told Reuters on Wednesday that OPEC
may cut oil supplies again, possibly by the end of this month if
prices keep falling and the world economy weakens further.
[]
"If the prices continue their decline, most probably OPEC will
have to take a further decision on a cut in supply," Khelil, who is
also Algeria's energy and mines minister, told Reuters in an
interview in Algiers.
Kuwait's oil minister said oil markets are oversupplied and OPEC
would consider cutting output again if inventories continued to
rise.
"If there is a surplus in the market and unwanted stocks, I
think OPEC has the right to look into this matter seriously,"
Kuwait's Oil Minister Mohammad al-Olaim told reporters, when asked
if the producer group needed to cut output again.
Analysts polled by Reuters ahead of U.S. weekly inventory data
forecast crude oil stocks rose by 1.2 million barrels last week,
while distillate inventories were seen rising by 800,000 barrels.
[]
Analysts also forecast a 300,000 barrel rise in gasoline stocks.
The data will be released on Thursday, a day later than usual due to
the U.S. Veterans' Day holiday on Tuesday.
(Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos in
New York; Christopher Johnson and Barbara Lewis in London; Sambit
Mohanty in Singapore; Editing by Marguerita Choy)
