Oil fell over 6 percent on Friday, as fears of economic slowdown weighed heavier than proposed production cuts by the world's major oil exporters. U.S. light crude for January delivery, which expired Friday, settled down $2.35 at $33.87 a barrel, the lowest since Feb. 10, 2004, when it ended at the same level. The more active February contract settled up 69 cents at $42.36 a barrel with cuts in OPEC production expected to take hold in that month. London Brent crude gained 64 cents, settling at $44.00. Friday marks the sixth consecutive day of falls in oil, off more than 29 percent from the $47.98 seen when prices last rose on Dec. 11. Oil prices have fallen more than $100 from their peak above $147 in July as a global economic downturn ripped into global oil demand, and looked set for one of their biggest weekly declines for years. Industry forecasters predict that global oil demand will contract for the first time since 1983. Pledges by the Organization of the Petroleum Exporting Countries (OPEC) to cut output by 2.2 million barrels per day (bpd) -- the largest ever reduction by the producer group -- failed to support January prices. "The market is signaling that it is taking a look at the OPEC cut and recognizing that is more likely to be evident in February," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "The Feb contract has not been able to crack $40 yet, but if inventories and refinery use continue to drop then pressure will resume," he added. However, many traders doubt OPEC, whose third production cut since September has brought its total reduction to more than 4 million bpd or 5 percent of world supply, will fully implement the agreed cuts. "We believe that full implementation of the cuts is unlikely," Goldman Sachs analysts said in a note to clients. OPEC kingpin Saudi Arabia's Oil Minister Ali al-Naimi, speaking in London on Friday, said the kingdom would be pumping less oil in January and would be at its new output target in line with the group's latest cut.
"BITE THE BULLET" That reassurance appeared to be having some impact on the market in late European trade on Friday. "From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months," said Jonathan Kornafel, Asia Director of Hudson Capital Energy. "Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor." OPEC President Chakib Khelil said on Friday he believed oil prices had found a floor around current levels. "I don't believe there is any reason for it to fall any further. I don't see it going lower," he told Reuters in London.