Oil falls to 22-month low at USD 55/barrel

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Perth, November 13: : Oil fell for a third straight day on Thursday to hit a 22-month low of $55 a barrel as mounting pessimism about the global economy outweighed OPEC's comments that it could cut output again as early as end-November.

OPEC officials, concerned about oil's steep drop from record highs over $147 a barrel per day (bpd) in July, said the cartel could possibly decide by the end of the month to cut production again to raise prices.

But comments from the producer group failed to lift oil prices, as investors focused on near-term demand worries after the US Energy Information Administration (EIA) slashed America's 2008 oil demand outlook and the International Energy Agency (IEA) flagged further reduction in its oil forecast.

US light crude for December delivery was down 81 cents at $55.35 a barrel by 0259 GMT, after having fallen earlier to $55.03 -- the lowest since Jan. 29, 2007.

London Brent crude fell 41 cents to $51.96 in early Asian trade.

"Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption," said David Moore, an analyst at the Commonwealth Bank of Australia.

Oil fell 5 per cent overnight, along with a big drop in US stock markets, after the US government shifted its position on how it planned to use its $700 billion bailout fund, which added uncertainty to financial markets and renewed fears of a protracted global recession.

Expectations that US government data to be released on Thursday would show a further build-up of crude and gasoline stocks also weighed on prices, analysts said.

Analysts polled by Reuters ahead of US weekly inventory data forecast crude oil stocks rose 1.2 million barrels last week, while distillate and gasoline inventories were seen rising by 800,000 barrels and 300,000 barrels respectively. Oil has lost about $91, or 62 per cent, from its record high of above $147 struck in mid-July, on growing evidence that recent high energy prices and the financial crisis have dented energy demand in the United States and other industrialised nations.

Demand in the United States, the world's biggest consumer of oil, was expected to fall by more than 1 million barrels per day (bpd) for the first time since 1980 this year, the EIA said.