By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil dived 4 percent to new five-year lows on Monday, as Wall Street expectations of a deeper price slump next year and a Kuwaiti prediction for $65 crude set off one of the biggest declines this year.

The chief executive of Kuwait's national oil company said oil prices were likely to remain around $65 a barrel for the next six to seven months, the latest indication that Gulf producers are content to ride out the rout.

The pessimistic outlook deepened the decline in a market that many traders see as a one-way bet for the time being.

“When these things go lower, they tend to go much farther than people anticipated,” said Tariq Zahir at Tyche Capital. “I definitely think we’re going to keep heading lower, everyone is trying to pick a bottom.”

Brent for January (LCOc1) fell $2.88, more than 4 percent, to settle at $66.19 a barrel, the third-largest one-day percentage drop this year and its lowest settlement price since October 2009.

U.S. crude (CLc1) fell 4.2 percent or $2.79 to end at $63.05 a barrel, its lowest since July 2009.

Late on Friday, Morgan Stanley set a new bar for bearishness on Wall Street, slashing its average 2015 Brent base-case outlook by $28 to $70 per barrel and warning that prices could drop as low as $43 a barrel next year.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.

Thus far, there appears little sign of intervention, even after oil prices dropped 15 percent, or nearly $12 a barrel, since the Organization of the Petroleum Exporting Countries opted not to cut production at its Nov. 27 meeting.

Top exporter Saudi Arabia has resisted calls from poorer members to curb output and shore up prices that have slumped more than 40 percent since June.

It is unclear how soon the price slump will slow the U.S. shale boom. The number of onshore rigs drilling for crude oil remains relatively high, and new U.S. projections released on Monday show production from the big three U.S. shale plays should carry on growing at over 100,000 barrels per day into January.

However, many companies are already starting to make deep cuts to spending for next year. On Monday, Conoco (COP.N) said it would slash spending by 20 percent, or $3 billion, the biggest reduction thus far announced by U.S. drillers.

Analysts at Standard Chartered said they expect drilling activity to fall "significantly" within two months.

(Additional reporting by Jack Stubbs in London, Manolo Serapio Jr in Singapore, Adam Rose in Beijing and Rania El Gamal in Kuwait; Editing by Christopher Johnson, Chizu Nomiyama, Bernadette Baum and Marguerita Choy)