* Oil near $63 a barrel, down nearly $5.
* OPEC agrees 1.5 mpbd cut
* European, Asian stock markets tumble
(Updates prices)
By Jane Merriman
LONDON, Oct 24 (Reuters) - Oil slid nearly $5 a barrel on
Friday as gloom about a global economic downturn that is sapping
fuel demand took the steam out of an OPEC agreement to cut
output.
Ministers of the Organization of the Petroleum Exporting
Countries agreed at an emergency meeting in Vienna to take 1.5
million barrels a day of crude, about 5 percent of its supply,
off the world market.
U.S. light crude for December delivery <CLc1> traded down
$4.80 at $63.04 a barrel. Earlier it touched $62.85, its lowest
since May 2007.
It has fallen $42 a barrel in a month.
London Brent crude <LCOc1> was down $4.42 at $61.50.
Saudia Arabia's Oil Minister Ali al-Naimi said the group had
agreed the output reduction with effect from Nov.1.
Traders said OPEC's action might not be enough to arrest a
slide that has seen oil down more than 50 percent from a record
$147 a barrel in July.
"Already we've seen demand destruction of 2 million barrels
per day. I'm not convinced this cut will be enough to stop the
slide." said Rob Laughlin, at broker MF Global.
"We need to see what they plan on doing later this year."
NERVOUS MARKETS
Oil has plunged as the credit crisis hits economic growth
and oil demand in the United States, the world's biggest energy
consumer, and other industrial countries.
"We believe this week will mark the start of a new quota
reduction cycle by OPEC and it will continue through 2009,"
Deutsche Bank analyst Michael Lewis said in a note.
"However, we believe production cuts will not rescue the oil
price," he said. "We target WTI (U.S.) crude oil prices hitting
$50 a barrel next year."
Analysts polled by Reuters had expected OPEC to reduce
output by between 1 million and 1.5 million barrels per day.
[].
The International Energy Agency, which advises
industrialised consumer countries, was critical of OPEC's cut.
"It's not a helpful decision because markets are quite
nervous," Eduardo Lopez, senior analyst at the IEA's oil market
division said.
Investors across financial markets are increasingly
pessimistic about the world economy, illustrated by sharp falls
in European and Asian stocks on Friday, led by around a 10
percent drop in Japan's Nikkei average <>.
Britain's economy, for example, contracted by 0.5 percent in
the third quarter of 2008, evidence that recession is on the
way.
Even gold, a traditional safe haven, was down nearly 5
percent, pressured by a surge in the U.S. dollar as investors
moved into cash.
(Additional reporting by David Sheppard in London and Fayen
Wong in Perth; editing by James Jukwey)
