* Oil sheds gains, hovers near $67 a barrel
* Asian stock markets slump, shrug off U.S. gains
* Analysts expect OPEC to cut by 1-1.5 million bpd (Updates
prices)
By Fayen Wong
PERTH, Oct 24 (Reuters) - Oil shed early gains on Friday
and fell nearly $1 to below $67 a barrel, near the previous
day's 16-month low, as investors shrugged off a likely OPEC
production cut to focus on signs of a prolonged global
recession.
Asian stocks fell on Friday, led by around 10 percent falls
in Japan's Nikkei average <> and South Korean shares, as
the global economic slowdown slashed earnings prospects for an
array of companies. []
Bleak outlooks from world car makers and a barrage of job
cuts by major U.S. companies, including Chrysler and Xerox,
have also deepened fears of an extended global recession.
[]
U.S. light crude for December delivery <CLc1> fell 96 cents
to $66.77 a barrel by 0605 GMT, erasing earlier gains of as
much as $1.66. London Brent crude <LCOc1> was down 87 cents at
$65.05.
"If it wasn't for an expected OPEC cut, there is a strong
possibility that oil prices would be falling a lot more
considering how poorly Asian stocks are performing," said David
Moore, a commodities strategist at the Commonwealth Bank of
Australia.
Moore added that a strong U.S. dollar, which jumped to a
five-year high against the pound and held near two-year highs
versus the euro [], was also lending some support to oil.
Oil has plunged more than 50 percent from its record high
above $147 in July and touched a 16-month low of $65.90 on
Thursday as the financial crisis eats into energy demand in the
United States and other industrial countries.
OPEC ministers, anxious to arrest a deep price slide and
yet cushion a bruised economy, said on Thursday they had agreed
they must cut output, but had not decided by how much.
[]
Analysts polled by Reuters anticipate the cartel will
reduce output by between 1 million and 1.5 million barrels per
day. [].
OPEC President Chakib Khelil said on Thursday the producer
group could consider cutting back its oil output in several
steps and added that he favours OPEC's reference crude oil
basket price at $90 to ensure energy projects go ahead.
Iran suggested on Thursday that a 2 million bpd cut would
be needed to stabilise oil prices, while Qatar said at least a
1 million bpd reduction was required. []
But analysts said the slowing global economy could limit
the impact of any oil supply cuts and that oil markets would
remain influenced by deleveraging and risk aversion.
"Extreme risk aversion remains at the top of the market
agenda in the current cyclical downturn," Harry Tchilinguirian,
a senior oil market analyst at BNP Paribas Commodity
Derivatives in London, said in a research note.
The grip of the financial crisis has reached far beyond the
banking sector, with electronics maker Sony Corp and U.S.
online retailer Amazon.com Inc <AMZN.O> cutting their outlooks
in the face of weakening consumer demand.
The number of U.S. workers filing new claims for jobless
benefits also rose by a larger-than-expected 15,000 last week,
government data on Thursday showed. []
(Editing by Michael Urquhart)
