* BP says U.S. demand down 2 million bpd
* U.S. factory activity falls to 26-year low
* Banks worldwide feel punch of credit crisis
(Updates throughout, adds settlement prices)
By Edward McAllister
NEW YORK, Nov 3 (Reuters) - Oil fell nearly 6 percent on
Monday as further indicators of falling demand linked to a
potential recession offset OPEC plans to reign in output.
U.S. crude <CLc1> settled down $3.90 at $63.91 a barrel,
after October saw the steepest monthly price decline ever for
oil as global demand slowed. London Brent crude <LCOc1> dropped
$4.84 to settle at $60.48 a barrel.
Oil hit a record $147.27 a barrel in mid-July but has since
more than halved as poor economic data added to pressure from
weak demand reports in the United States and other key consumer
nations.
"The most devastating blow for crude oil today is data
showing that U.S. manufacturing activity in October fell to the
lowest level in 26 years, which means more worries for oil
demand," said Phil Flynn, an analyst at Alaron Trading, in
Chicago.
"Manufacturing used to be a great forward indicator for oil
demand, but if the manufacturing sector is down, it will be a
struggle to keep oil demand up," he added.
U.S. factory activity -- a barometer for future oil demand
-- contracted sharply in October, falling to its lowest in 26
years as the financial crisis racked the world's largest
economy. []
The Institute for Supply Management said its index of
national factory activity fell to 38.9 in October from 43.5 in
September. A reading below 40 is exceptionally weak.
BP <BP.L> Chief Executive Tony Hayward estimated U.S.
demand has dropped 2 million barrels per day on the year over
the last four weeks. []
Corporate results and outlooks worsened on Monday, and
automotive companies from Japan to Italy to Detroit said
October sales were the weakest in about 20 years as economies
continued to weaken and consumer credit, and available cash,
dried up. []
Ford Motor Co's <F.N> U.S. sales for October were down 30.2
percent on last year, with General Motors, Chrysler, Nissan and
Volvo all reporting considerable slumps year on year.
OPEC CUTS
The market has been awaiting signs Saudi Arabia has cut
back crude production after the OPEC agreed in October to
reduce output by 1.5 million barrels per day (bpd) to support
tumbling prices.
Saudi Arabia has yet to inform its customers of any cuts in
November oil supply, trade sources in Asia said. []
OPEC President Chakib Khelil said on Sunday that cartel
members must implement agreed output cuts and inform customers
of the reductions if they want a stable oil price between
$70-$90 a barrel. []
United Arab Emirates Oil Minister Mohammed al-Hamli said
the OPEC member has kept its pledge to cut oil supplies in line
with commitments. []
A Reuters survey showed OPEC oil supply fell in October for
a second consecutive month as Saudi Arabia and Iran trimmed
production and maintenance curbed supply in the United Arab
Emirates. []
A separate poll of analysts ahead of weekly U.S. government
inventory data forecast U.S. crude oil stocks rose by 1.1
million barrels last week. The analysts predicted a
1.3-million-barrel build in distillate inventories and a
1-million-barrel drawdown in gasoline stocks. []
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Alex Lawler and Ikuko Kao in London and Fayen Wong in
Perth; Editing by Christian Wiessner)
