* After 6 pct dive, oil deepens drop below $40
* Traders seek more signs of OPEC output cuts
* U.S. GDP due later on Tues, oil inventory rise eyed Weds
By Jonathan Leff
SINGAPORE, Dec 23 (Reuters) - Oil prices extended their
sharp fall to drop further below $40 a barrel on Tuesday,
weakened anew by growing signs of deteriorating world oil
demand.
Final third-quarter U.S. gross domestic product data due
later in the day is likely to underscore the ailing state of
the world economy as a steady series of stimulus measures and
policy moves -- including China's fifth interest rate cut --
fail to halt a slide towards the worst recession in decades.
U.S. crude for February delivery <CLc1> fell 49 cents to
$39.42 a barrel after diving 6 percent on Monday, with volume
particularly thin as traders seek to close out the worst-ever
year for oil futures, which are now down 57 percent from
January.
ICE Brent <LCOc1> fell 42 cents to $41.03 a barrel.
Deepening losses for U.S. stocks and the most dramatic
decline ever in Japanese exports heightened anxiety on Monday
about the condition of the world economy; signs that oil demand
is likely to contract for the first time in a quarter century
has already knocked oil prices over $100 off their July peaks.
The Organization of the Petroleum Exporting Countries
(OPEC) has rushed to cut about 5 percent of world supplies to
counter the collapse in demand, last week agreeing an
unprecedented 2.2 million barrels per day.
A senior OPEC delegate said the group was ready to reduce
supply further if needed, but oil traders have said they are
most concerned for now with seeing evidence of improved
compliance with the existing curbs.
"The trend at the moment is still south," said Justin
Wilks, director of trading and operations for $300 million
Australia-based fund manager Global Commodities.
"Any amount of production cuts will take a little time to
come through, but like base metals it's all tied to economics
at the moment," he added.
While Saudi Arabia had cut output more deeply ahead of
OPEC's meeting two weeks ago, other major members have yet to
show their hand. Sources with several Asian refiners said on
Tuesday that they had not received any new notices as yet.
Prices got no lift from a WSI Corporate forecast that a
relatively warm January will give way to colder-than-usual
late-winter weather in the U.S. Northeast that could boost
demand for heating fuels. []
Surging demand from China and other emerging nations sent
crude on a six-year rally to record highs over $147 a barrel
stuck in July, before the economic crisis began to slow demand
in top consumer the United States and big economies.
Now, however, even the leaders appear to be showing the
toll of the global financial crisis and its impact on the
economy.
Apparent oil consumption in China fell by 3.2 percent in
November from a year ago, the first decline in nearly three
years, Reuters calculations confirmed this week, while crude
imports into the world's No. 2 energy consumer dropped to the
lowest level this year. []
Later on Tuesday traders will be looking for confirmation
the U.S. economy contracted by 0.5 percent in the third
quarter, in line with preliminary data. <ECONG7>
On Wednesday, weekly U.S. oil inventory data is expected to
show crude stocks rose by 300,000 barrels in the week to Dec.
19, with distillate and gasoline stocks also expected to have
gained, according to an early Reuters poll of analysts.
[]
(Editing by Ben Tan)
