Oil fell below $90 a barrel on Friday after mostly weak U.S. economic data triggered fresh concerns of a recession in the world's top oil consumer, overshadowing OPEC's decision not to raise output.
U.S. light, sweet crude for March delivery fell, off highs of $92.12. London Brent crude was down.
U.S. employers unexpectedly cut 17,000 non-farm jobs last month, the first fall in nearly 4-1/2 years, providing further evidence of a slowing economy.
Construction spending in the United States fell by a sharper-than-expected 1.1 percent in December, reflecting the woes in the country's housing market, while data released by New York-based independent forecaster Economic Cycle Research Institute showed a very high risk of a U.S. recession.
The bearish economic data weighed on stocks and the U.S. dollar, dragging down with them oil prices that had rallied earlier in the session after OPEC decided to keep output levels steady.
"It will be extraordinarily difficult to dispel ideas the economy is not headed into a recession... General economic slowing appears to be taking place just as crude oil stocks have begun seasonal rebuilding," said Mike Fitzpatrick at MF Global.
OPEC ministers meeting in Vienna once again rejected calls from consumer countries to pump more oil amid worries that high fuel prices are adding to recessionary pressures in the West.
Calls For Cut
The decision was widely expected, with a chorus of ministers reiterating ahead of the meeting that the oil market was well supplied, and a small group -- Iran and Venezuela -- even calling for a production cut at their next gathering on March 5.
Analysts said OPEC appeared keen not to repeat its experience of 1997 when it boosted supplies ahead of an economic slowdown and prices collapsed to $10 a barrel.
"I absolutely expect them to consider cutting output in March... To me the only question is will it be a formal cut or...just cut informally," said Mike Wittner, oil analyst at Societe Generale.
"A lot depends of the price itself. If prices drop another $10 it's easier for them to have a formal cut."
Simon Wardell, analyst at Global Insight said OPEC could decide next month to cut output by as much as 750,000 barrels per day from April 1.
OPEC's decision comes as concerns mount the United States is headed for a recession after recent economic data pointed to a deteriorating economy. A major U.S. recession could affect the world economy and with it oil demand and prices.
"OPEC will not see their roles as defending economic growth but as that of providing a stable flow of oil at a fair price," said Robin Batchelor, managing director at BlackRock Merrill Lynch Investment Managers.
A gloomy outlook for the U.S. economy has sent many speculative investors, who helped propel oil's rally above $100 a barrel last month, into safer havens.
The U.S. Federal Reserve has sought to ward off a recession by a series of interest rate cuts. It has cut rates by 125 basis points in two tranches in the last nine days.