Enlarge imageBy Rebekah Kebede
NEW YORK (Reuters) - Oil prices fell below $49 a barrel on Tuesday as news that OPEC made only two-thirds of its pledged output cuts last month outweighed a rebound in the U.S. stock market.
U.S. crude traded 53 cents lower at $48.75 a barrel by 12:54 p.m. EST (5:54 p.m. British time), after touching a new 3-1/2-year low of $47.36. London Brent fell 73 cents to $47.24 a barrel, after touching $46.02, its lowest since February 2005.
"The story about OPEC still not in full compliance with pledged output reductions is the reason why crude futures are down right now," said Phil Flynn, an analyst at Alaron Trading in Chicago.
"This lack of compliance is disappointing to the market and this puts into doubt OPEC's indications that they will make more production cuts later this month."
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Members of the Organisation of Petroleum Exporting Countries had pledged to lower output by 1.5 million barrels per day for November, but were only 66 percent compliant with the target last month, a Reuters survey showed on Tuesday.
Crude prices have fallen nearly $100 a barrel from a peak of more than $147 in July due to weak demand for oil products during a mushrooming global economic crisis, pushing the cartel to agree to supply cuts.
OPEC's decision to wait until later this month to take more supply off the market, combined with a steep sell-off in U.S. stocks, led to a drop of more than 9 percent in U.S. crude oil futures on Monday.
Benchmark U.S. stock indexes were up more than 3 percent on Tuesday as investors hunted for bargains amid optimism about a government bailout for the U.S. auto industry. [nN02260271]
OPEC CUTS
Still, OPEC members remained concerned about oversupply in the world oil market and may decide to cut output further at their next meeting in Algeria on December 17.
"We are concerned about the glut ... I think there is an indication that we will have another cut," Qatar Oil Minister Abdullah al-Attiya said. [nWLA2760]
Top oil exporter Saudi Arabia has highlighted $75 a barrel as a "fair price" for oil.
Meanwhile, sources said two OPEC members, the United Emirates and Kuwait, will increase oil sales to many major Asian customers, sending mixed signals about OPEC output cuts.
More bearish news for oil prices could be in store on Wednesday, when the U.S. government reports weekly oil inventory data.
A preliminary Reuters poll of analysts showed U.S. crude inventories likely rose by 1.8 million barrels last week, a third consecutive weekly build, as imports continued to increase.
(Additional reporting by Christopher Johnson and Jane Merriman in London and Annika Breidhardt in Singapore; Editing by Walter Bagley)
