Oil is far below the record of $147 a barrel reached in July

Oil prices have tumbled by more than $5 a barrel after producers' group Opec declined to cut output at its informal meeting at the weekend.

Extending recent falls, US light crude was down $5.15 to $49.28 a barrel, while Brent was $5.52 lower at $47.97.

The falls came despite Opec saying it may vote on a "major" output cut at its next regular meeting later this month.

Opec added it would trim output if prices continued to "deteriorate" towards the end of the year.

Falling steadily

Oil prices have fallen back steadily from July's all-time high of $147 a barrel, as demand has declined on the back of the slowing worldwide economy.

Demand is disappearing underneath them fast

Energy analyst Victor Shum

"If we see the market is deteriorating we will make a major action in Algeria and anywhere if necessary," said Opec secretary general Abdalla Salem El-Badri.

Saudi Arabia's King Abdullah said at the weekend that oil prices should be above $75 a barrel, but oil analysts believe this would be hard to achieve.

"They need to cut a lot to get the price to $75," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

"Demand is disappearing underneath them fast."

Iranian calculation

Iran's Oil Minister Gholam Hossein Nozari has estimated that the global market is currently oversupplied by about 2 million barrels per day.

He now wants Opec to cut production by the same amount.

The producers' group, which is responsible for 40% of global crude supplies, last cut output by 1.5 million barrels a day in October.

Opec comprises 12 countries - Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.





