Oil slips under $47 after spike

Crude headed lower for the first time in three days today after jumping nearly $6 in the past two days as the Opec president called for more ‘severe’ production cuts at its meeting next week.

By 0018 GMT, crude for January delivery traded down $1.15 at $46.83 a barrel, after settling up $4.46, or 10.3%, yesterday in the biggest single-day percentage gain since 4 November. Crude prices have lost about $100 from a record peak of $147.27 scaled last summer as the global financial crisis hits consumer demand for fuel. The previous day’s strong gains came after Opec President Chakib Khelil said in remarks published that Opec should agree on a more “severe” reduction in output at the 17 December meeting in Algeria. Traders are closely watching Opec for any more signals on what some analysts perceive to be a further 1 million to 2 million barrels per day output cut due at the group’s meeting next week. There was no trading in London Brent crude after it settled up $4.99, or 11.8%, at $47.39 yesterday. The dollar fell broadly yesterday, hitting seven-week lows against the euro and yen, which also helped crude’s gain. Support also came after Russia’s President Dmitry Medvedev said the country was ready to work with Opec on possible crude output. A prediction from the International Energy Agency that world oil demand growth would rebound in 2009 after shrinking this year for the first time since 1983 also helped the market. The IEA’s view that demand will grow in 2009 contrasts with that of the US government’s Energy Information Administration, which this week forecast consumption would fall by 450,000 barrels per day next year. Saudi Oil Minister Ali al-Naimi said the world’s largest exporter pumped 8.49 million barrels per day of crude in November, less than estimated by analysts and in line with its Opec target. That would put the kingdom’s output at 560,000 bpd less than the IEA’s estimate of Saudi November production, published yesterday, of 9.05 million bpd, reported.

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