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By Samuel R. Avro on Dec 19, 2008 with no responses

Crude Oil Falls Again; Settles Below $34 on Weak Demand Outlook

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Fears that the economic recession would continue, pushed oil prices lower again on Friday even after the announced production cuts by OPEC earlier in the week.

U.S. light, sweet crude for January delivery, which was due to expire later on Friday, fell $2.35 to settle at $33.87 a barrel.

However, the more active futures contract for February gained 73 cents to $42.40 as the production cut is expected to take effect at that time.

According to Bloomberg, it’s the biggest premium between the two most-active contract months dating back to 1986.

At one point, January futures touched $32.40, the lowest since February 2004.

OPEC’s pledged production cut of another 2.2 million barrels per day was received with skepticism amongst some analysts.

“We believe that full implementation of the cuts is unlikely,” Goldman Sachs analysts said in a note to clients.

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.

Khelil also said that the oil cartel will meet again on January 19 in Kuwait to discuss a further production cut if needed.

“Despite the efforts that OPEC has made, prices haven’t recuperated sufficiently,” Venezuelan Finance Minister Ali Rodriguez told reporters today in Caracas. “Certainly once again there will have to be additional efforts.”

Oil has fallen well over $100 since its peak of $147 back in July of this year.

“I still think that the amount of time that crude spends below $40 bbl will be days,” says Tom Kloza, Chief Oil Analyst at the Oil Price Information Service. “There will be more, but I just don’t see months at that level,” he said.