Crude Oil Falls

Crude oil fell, retreating from $50 a barrel in New York, on speculation that OPEC production cuts may be insufficient to bolster prices as the global recession curbs fuel consumption.

U.S. fuel demand may drop further as manufacturing in the country declines. Chinese crude processing tumbled to the lowest in 15 months, a report showed. Prices rose earlier today when OPEC Secretary-General Abdalla El-Badri said the group needs to make a sizable” output cut at this week’s meeting in Algeria.

Crude oil for January delivery fell $1.76, or 3.8 percent, to $44.52 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices reached $50.05, the highest since Dec. 2.

Industrial production declined 0.6 percent in November, the third drop in four months, the Federal Reserve said today in Washington.

China’s refineries processed 27.27 million tons of crude last month, or 6.64 million barrels a day, as an economic slowdown cut demand, the China Mainland Marketing Research Co. said in a statement today. China is the second-biggest oil- consuming country, after the U.S.

OPEC is asking Russia, the second-largest producer after Saudi Arabia, to reduce oil output by 200,000 to 300,000 barrels a day to help revive prices, OAO Lukoil Chief Executive Officer Vagit Alekperov said in Moscow today. Alekperov and Russia’s Deputy Prime Minister Igor Sechin are attending the meeting.

February oil options rose and January contracts fell as traders rolled their positions in electronic trading before the expiration of January options tomorrow in New York. Bets that January oil will rise above $50 a barrel were the most active on the day. Bets February oil will fall below $40 or rise above $53 were the most active contracts for the next trading month.

Brent crude oil for January settlement declined $1.71, or 3.7 percent, to $44.70 a barrel on London’s ICE Futures Europe exchange., Bloomberg
12/15/2008 12:02:38 PM