Oil prices on Monday fell below $50 a barrel for only the second time this year after Opec delayed a further production cut until mid-December. The oil cartel, which controls 40 per cent of the world's production, said demand was weakening fast with the global economic crisis but it agreed to wait until a meeting in Oran, Algeria, on December 17 to further reduce its output.In late trade, Nymex January West Texas Intermediate fell $5.15 to $49.28 a barrel. ICE January Brent fell $5.52 to $47.97 a barrel.
Abdalla El-Badri, Opec secretary-general, said the cartel was heading for a cut. "We are all geared towards a cut in Algeria...There will be action there."
The cartel has promised to lower its production by about 2m barrels a day in the past two months but analysts said it had so far cut about 1m-1.2m b/d.
Ed Meir, of MF Global in New York, said that, in spite of knowing that the oil markets were oversupplied, Opec decided to pass on making any quota cuts at its weekend meeting in Cairo. "Apparently, Gulf producers insisted on stricter compliance of existing cuts before new ones were introduced," Mr Meir said.
The drop in oil prices was exacerbated by signs of sharply lower manufacturing activity worldwide in November, traders said.
Oil products were also lower. Nymex January RBOB gasoline dropped 8.9 cents to $1.1197 per gallon while Nymex January heating oil dropped 10 cents to $1.6270 a gallon.