By Maryelle Demongeot
SINGAPORE (Reuters) - Oil was steady below $44 on Friday, at its lowest level 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 U.S. economic indicators, with lower retail sales and a 26-year high in jobless benefits rolls the latest to add pressure to prices.
U.S. light crude for January delivery rose 29 cents to $43.96 a barrel, having lost more than 6 percent on Thursday to settle at $43.67, the lowest since January5, 2005.
London Brent crude rose 2 cents to $42.30.
"$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 U.S. 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.
U.S. and European companies announced further job cuts, with U.S. phone company AT&T Inc saying it would eliminate 12,000 jobs, while chemical maker DuPont Co planned to drop 2,500.
Leading U.S. 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 December 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 million will mean another sell off," Edward Meir, commodities analyst at MF Global said.
Emori said a cut of at least 2 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.
(Additional reporting by Nick Trevethan; Editing by Clarence Fernandez)
© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
