Singapore - World crude prices weakened in Asia on Monday after the Opec oil cartel maintained existing production quotas at a weekend meeting amid a global downturn, dealers said.
Opec's decision underlined the severity of the world economic slump which has already sapped energy demand in the United States, the world's biggest oil user, they said.
New York's main contract, light sweet crude for January delivery, sank 88c to $53.55.
Brent North Sea crude for January delivery eased $1.27 to $52.22.
The Organisation of the Petroleum Exporting Countries (Opec), suffering from declining oil prices, decided at a meeting Saturday in Cairo to freeze its output quota.
"That is quite bearish for the market itself," David Ernsberger, Asia editorial director with Platts, an energy information provider, said.
"Ever since July, the market has been struggling to cope with the fact that US demand is down... So the underlying sentiment is still weak," he said.
Opec, which pumps 40% of the world's crude, said any further decision regarding the production quota would be decided at a December meeting in Oran, Algeria.
Big decline in oil price ahead
"Ministers agreed to take any additional action on December 17th to balance oil supply and demand and achieve market stability," Opec President Chakib Khelil, who is also Algeria's energy minister, said in Cairo after the meeting.
"We took note of the serious deterioration in the world economy and its serious consequence on the oil price," Khelil said.
Opec also predicted on Saturday that prices would not recover before the middle of next year.
"The prices will not begin to rise before the second half of 2009," said Secretary General Abdalla Salem El-Badri.
Khelil, addressing a news conference, also acknowledged that the global financial crisis and looming worldwide recession would dampen demand significantly for the first six months of 2009.
"We realise that in the first quarter of next year we are probably going to have a decline in demand, and in the second quarter we are going to have a big decline," he said.
Opec has already slashed output twice this year by a total of two million barrels per day in response to falling prices but fears of a global downturn continued to push prices lower.
Crude prices are down by more than 60% from record peaks of above $147 seen in July.
Analysts said Opec's hands were tied because cutting output could damage the world economy even more.
"With much of the world in or heading towards a recession, Opec does not have a huge amount of political leverage in being able to dramatically reduce production," said BetOnMarkets analyst Dave Evans in London.
"They have to support crude prices while at the same time ensuring that they do not do long-term damage to the global economy. They cannot afford to bite the hand that feeds."
- AFP