Oil remains steady as volatility eases

Oil prices were steady near 22-month lows yesterday in Asia as investors paused to examine the extent of global economic weakness, which has sent crude down more than 60 per cent in four months.

Light, sweet crude for December delivery was up eight cents to $54.47 a barrel in electronic trading on the New York Mercantile Exchange by mid afternoon in Singapore. The contract on Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007.

"Market sentiment is still bearish, but not as bearish as a week ago," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "Volatility has come down and the market is consolidating a bit."

Oil investors have already priced in a recession in developed countries and only evidence of an especially severe or prolonged slowdown may push prices down further, Chu said. "I don't see oil falling below $50," Chu said. "It should be above $60 in a couple weeks."

Opec is holding an informal meeting later this month ahead of its official December meeting. Opec President Chakib Khelil has signaled the group may announce production cuts at the December meeting, but some members, such as Iran, have called for earlier cuts.