Oil tumbles to below $50

Columbus, Ohio - Oil prices tumbled below $50 a barrel Monday as manufacturing activity in the US hit a 26-year low, a showing that was much worse than expected.

The price drop also comes two days after OPEC said it would not cut production of crude before its regularly scheduled meeting in three weeks.

Manufacturing and consumer spending has eroded quickly and lowered demand for energy. That has erased nearly 66% of crude's market value since July when it peaked near $150 per barrel.

Light, sweet crude for January delivery fell 8.4%, or $4.58 to $49.85 a barrel on the New York Mercantile Exchange. The contract had settled down a penny at $54.43 on Friday.

Analyst Phil Flynn with Alaron Trading said the $50 price remains significant psychologically for traders.

"It opens up the possibility of further declines," he said.

In a note to investors Monday, Raymond James Equity Research slashed its oil price forecast from $90 per barrel to $60 per barrel.

In London, January Brent crude fell 9%, $4.85 to $48.64 on the ICE Futures exchange.

On Saturday, Saudi Oil Minister Ali Naimi said that Organization of Petroleum Exporting Countries will do what needs to be done to shore up falling oil prices when the group meets December 17 in Algeria, but for now it was too early to make another cut.

Prices continued to slide despite a separate report by Iranian state TV in which OPEC Secretary-General Abdullah El-Badri said that a daily oil production cut of between 1 million and 1.5 million barrels was likely in December.

OPEC, which accounts for about 40 percent of global supply, cut output by 1.5 million barrels a day in October, bringing total quota cuts to around 2 million barrels a day this year.

- AP