UPDATE 8-Oil drops 5 pct as markets fall, OPEC

                                
 * OPEC likely to defer third supply cut until Dec
                                
 * U.S. stocks slip on retail jitters
  (Updates throughout, changes dateline from LONDON)
                                
 NEW YORK, Nov 28 (Reuters) - Oil dropped more than 5
percent to below $52 a barrel on Friday as U.S. stock markets
fell and on signs OPEC would defer cutting production when it
meets this weekend.
                                
 U.S. light crude for January delivery <CLc1> fell to $51.39
a barrel at 11:24 a.m EST (1624 GMT), down $3.05 from
Wednesday's close. U.S. markets, including the New York
Mercantile Exchange, were shut on Thursday for the Thanksgiving
holiday, though crude did trade on Globex.
                                
 London Brent crude <LCOc1> traded down to $51.02, off $2.11
from Thursday's settlement.
                                
 U.S. stocks slipped in thin holiday trade on Friday after a
streak of gains as investors nervously eyed post-Thanksgiving
sales to gauge how retailers will fare this holiday season.
[nN28418415]
                                
 "The market seems to refocusing again on the fact that the
U.S. economy is in bad shape and as there has been a fall off
in global economy," said Gene Mcgilllian, analyst, Tradition
Energy, Stamford, Connecticut.
                                
 U.S. crude is on course to end the month down more than 20
percent, despite a supply cut of 2 million barrels per day by
the Organization of the Petroleum Exporting Countries (OPEC)
agreed at meetings in September and October.
                                
 "In theory, if supply gets cut, prices should go up, but
the problem is what is the level of demand," said Adrian
Pankiw, strategist at Henderson Global Investors.
                                
 "The question is: Is OPEC cutting supply faster than demand
is falling?"
                                
 Falls in demand in top energy consumer the United States
and other industrialized countries have helped drive U.S. crude
down almost $100 from a record peak of more than $147 a barrel
in July. It fell by almost a third last month, its biggest
monthly drop ever.
                                
 Global oil demand is expected to decline slightly this year
and next, the first fall in a generation because of the world
economic downturn, according to a Reuters poll. [ID:nLQ285707]
                                
 OPEC ministers gathering in Cairo for an informal meeting
said they were likely to defer a decision on fresh output cuts
until next month, despite an accelerating slump in fuel demand
that has slashed the price of oil by two-thirds since July.
[nLS523431]
                                
 Several OPEC delegates have said the Cairo gathering is
likely only to measure compliance with existing cuts, leaving a
decision on any further reduction until the group's next
policy-setting meeting on Dec. 17 in Algeria.
                                
 A Reuters poll this week of 15 analysts forecast by a
narrow margin that OPEC would make no announcement of a further
reduction in oil output this weekend but would probably do so
at its meeting in Algeria.
 (Reporting by Matthew Robinson and Gene Ramos in New York;
Jane Merriman and Christopher Johnson in London and Maryelle
Demongeot in Singapore; Editing by David Gregorio)