By Annika Breidthardt
SINGAPORE (Reuters) - Oil slid to a 3-year low under $48 on Tuesday, extending the previous day's sharp drop as signs grew the global economy is in worse shape than thought and after OPEC opted to delay talks on further output cuts.
Japan's Nikkei average slid more than 6 percent on Tuesday, with exporters hit by a stronger yen after signs the U.S. economy has been in a recession for a year heightened risk aversion.
U.S. light crude for January delivery fell $1.85 or 3.8 percent to $47.43 a barrel by 0656 GMT, the lowest since May 2005 and almost $100 off the record peak of $147.27 reached in mid-July. That followed a more than 9 percent dive on Monday.
London Brent crude dropped $1.67 to $46.30.
Surging demand from emerging countries sent oil on a six-year rally from 2002, but prices have tumbled since July's all-time high above $147 a barrel as economic turmoil erodes demand in top consumer the United States and other big developed nations.
Producer group OPEC over the weekend deferred a decision on whether to deepen production curbs until later this month as Saudi Arabia and other Gulf members called for greater compliance, a delay that sent oil prices tumbling on Monday.
More bearish news could be in store on Wednesday, with U.S. crude oil inventories likely having risen by 1.8 million barrels last week, a third consecutive build, as imports continued to increase, a preliminary Reuters poll of analysts showed.
"The economic situation is gloomy and people don't want to consume oil even as the price is getting cheaper," said Tetsu Emori, fund manager at Astmax Co Ltd in Japan/
The Organization of the Petroleum Exporting Countries is ready to cut production by a significant amount when it meets later this month in Algeria in order to whittle down high stocks, the group's secretary-general said on Monday.
But Saudi Arabian Oil Minister Ali al-Naimi told Saudi-owned al-Hayat newspaper OPEC would not need to make a further output cut in Algeria if producers comply with previous curbs and fuel stocks decline.
Adding to the uncertainty, Abu Dhabi National Oil Co (ADNOC) told major Asian customers that it will increase term crude oil supplies next month, although traders said it seemed unlikely the UAE was reneging on its OPEC obligations.
The full-scale allocations appeared to reverse the blanket 5 to 15 percent export cuts that ADNOC announced after OPEC slashed output in late October, but traders said the United Arab Emirates' main producer could be making more discreet, targeted cut-backs to specific customers.
With demand destruction in focus, concerns about the pace of non-OPEC oil supply growth were set aside.
Oil production in Russia, which vies with Saudi Arabia as the world's top producer, fell in November by 0.4 percent versus October, Energy Ministry data showed on Tuesday.
(Reporting by Annika Breidthardt, Editing by Ben Tan)
