SINGAPORE -- Oil was steady below $44 on Friday, at its lowest in almost four years, with eyes turning to the psychologically important $40 level as a widening economic slowdown gnaws into oil demand.
Prices have lost nearly 20 percent, or almost $11, from their settlement a week ago following the release of weak US economic indicators, with lower retail sales and a 26-year high in jobless benefits rolls the latest to add pressure to prices.
US light crude for January delivery fell four cents to $43.63 a barrel, having lost more than 6.0 percent on Thursday to settle at $43.67, the lowest since Jan. 5, 2005.
London Brent crude dipped eight cents to $42.20.
"$40 is a very important psychological level," said Tetsu Emori, fund manager at Astmax Co. Ltd. "We first hit $40 in 2004 and prices then started accelerating up from there. We still have to find where the bottom line is for prices."
The number of US workers collecting jobless benefits hit a 26-year high last month, data showed on Thursday, and may head higher as a growing economic slump forces a broad range of firms to cut jobs.
US and European companies announced further job cuts, with US phone company AT&T Inc. saying it would eliminate 12,000 jobs, while chemical maker DuPont Co. planned to drop 2,500.
Leading US retailers also reported dismal November sales on Thursday. Totting up the results, the International Council of Shopping Centers said sales fell by a record 2.7 percent compared to the same period last year.
To try and ginger up their feeble economies, European central banks cut interest rates on Thursday.
Sweden's central bank cut by a record 175 basis points, the European Central Bank cut by 75 points and the Bank of England cut by 100 points.
The price fall to nearly four-year lows has prompted OPEC members to call for increasingly strong action when the Organization of the Petroleum Exporting Countries meets next, on Dec. 17 in Algeria.
OPEC President Chakib Khelil told Algerian state television on Thursday that the oil-producing cartel should cut oil output by a significant amount at the meeting if prices remain at their current level.
But analysts say another OPEC cut, the third since September, would need to be drastic to provoke a price reaction.
"Cumulatively, OPEC is behind the curve by 4-5 million barrels per day (bpd). They really need to cut by 2.5 to 3 million barrels to have any impact on prices at the next meeting. Less than 1.5 milion will mean another sell off," Edward Meir, commodities analyst at MF Global said.
Emori said a cut of at least two million bpd at the next meeting would be needed to prevent further falls in prices.
"The market has not been really reacting to the first cuts," Emori said.
