Oil edges above $55 after hitting 22-month low

RECESSION IMPACT: Oil hit its lowest mark in 22 months as the global economic gloom deepens. (Getty Images)

Oil edged above $55 a barrel on Tuesday after settling at its lowest in nearly 22 months, as fears mounted that the worsening global economic slump is trimming fuel demand further.

Japan became the latest major economy to fall into recession and Citigroup said it would cut 52,000 jobs, one of history's largest layoffs.

US light crude for December delivery rose 16 cents to $55.11 a barrel at 5.18am Dubai time, after settling at the lowest level since Jan. 29, 2007 in the previous session.

London Brent crude was untraded at the same time.

U.S. crude has plummetted more than 60 percent from its July record above $147 a barrel as the credit crisis has hit the real economy and limited fuel use in top consumers such as the United States.

"Oil is still driven by concern about the weak outlook for oil consumption," said David Moore, commodity strategist at Commonwealth Bank of Australia. "Equity markets are not helping."

Japan's Nikkei share average slid 1.3 percent on Tuesday, dented by Wall Street losses overnight.

And China became a net diesel exporter in October for the first time since August 2007 and remained a net gasoline exporter for a second month, as heavy inventories and higher refinery output lessened import needs.

That bodes ill for the global refining industry, which had counted on China's appetite for fuel stockpiling in the months leading to the August Olympics to pick up the slack left by a worldwide economic and consumption slump.

Mexico reopened the oil exporting port of Coatzacoalcos on Monday after bad weather had shut them, but the Dos Bocas port was still closed.

The Organisation of the Petroleum Exporting Countries cut its 2009 global demand forecast, adding to signs the producer group could cut production further to stem the oil price drop.

OPEC's Secretary General Abdullah al-Badri said it was too early to say whether the producer group needed to cut output when it meets this month in Cairo.

OPEC, source of more than a third of the world's oil, has not yet called a full-blown policy meeting for the Cairo gathering on Nov. 29. Ministers were set to meet informally on the sidelines of an annual gathering of Arab oil ministers.

Since early September OPEC has agreed to remove around 2 million barrels per day from oil markets, and several OPEC members want more cuts. Iran is calling for another 1 million to 1.5 million bpd in output cuts. (Reuters)

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