Analyst says recession could drag oil below $50

(In U.S. dollars)

By Scott Haggett

CALGARY, Alberta, Oct 2 (Reuters) - A deep and sustained worldwide recession could push oil prices below $50 a barrel, oil analyst Philip Verleger said on Thursday, as the ongoing financial crisis cuts demand.

Verleger, an independent oil analyst who recently joined the University of Calgary's Haskayne School of Business, said in an interview that oil prices will not stay at current levels near $100 if the global economy skids into recession and economic activity slows, dragging down demand for crude.

"If we really have a serious recession you could see prices fall below $50 a barrel," he said. "And this is not just the U.S., this is global."

Oil prices, which closed at $93.65 a barrel on Thursday, have already fallen by more than a third since reaching above $147 a barrel in July, and a number of forecasters have predicted further drops as industrial activity slows.

Indeed, Merrill Lynch commodity analysts on Thursday said in a report that oil prices could fall as low as $50 a barrel next year if the current slowdown deteriorates into a recession, a scenario they said was unlikely.

Verleger said oil prices may depend on whether the exporting countries of the OPEC cartel can maintain production discipline and restrict supplies.

"If OPEC can control itself they can keep prices up," he said. "If not, prices will go down."

The credit crisis began more than a year ago because of risky lending in the overheated U.S. housing market, and has since claimed banks, rattled stocks and raised worries that it may halt global economic growth.

Some, including Verleger, liken the crisis to the Great Depression of the 1930s and if things get really bad, oil may have even further to fall.

"This is the most serious economic downturn in the last 80 years," he said.

"If we really plunge over the abyss, though I don't think we will, oil could go back and visit $10." (Reporting by Scott Haggett; editing by Rob Wilson)