Oil fell for a second day in New York as Japan entered its first recession since 2001 and China's largest crude producer said demand has declined  "sharply.'' Japan's economy contracted 0.4% in the September quarter, official figures today showed. China National Petroleum Corp., the biggest producer in the world's second-largest oil consumer, said demand has fallen since September because of the global credit crisis. OPEC may wait until December to cut output, the group's president said.

"As the stream of bearish news continues unabated, oil prices are again under pressure,'' said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. "The only hope for a price recovery is a big production cut by OPEC or a shut-in of some high-cost non-OPEC production.'' Crude oil for December delivery dropped as much as US$1.44, or 2.5%, to US$55.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at US$56.32 at 9:17 a.m. in London.

Prices remained lower today even after Royal Dutch Shell Plc and Chevron Corp. announced pipeline disruptions in Nigeria. Shell extinguished a fire at a pipeline that carries crude to the Forcados export terminal. Chevron shut its onshore production in the country after a pipeline breach last week.