Oil at four-year lows near $ 40 despite OPEC cut
Oil traded near $ 40 a barrel today, at its lowest levels in more than four years, despite OPEC's announcement of a record production cut.business Updated: Dec 18, 2008 09:46 IST
Oil traded near $ 40 a barrel today, at its lowest levels in more than four years, despite OPEC's announcement of a record production cut.
New York's main futures contract, light sweet crude for delivery in January, was down five cents at $ 40.01 a barrel, off a low of $ 39.19.
The contract closed at $ 40.06 a barrel yesterday at the New York Mercantile Exchange, a decline of $ 3.54.
Brent crude oil for February delivery rose 10 cents to $ 45.63 a barrel, off a low of 45.35, after falling $ 1.12 to close at 45.53 yesterday in London.
The Organisation of the Petroleum Exporting Countries (OPEC), the cartel that produces about 40 per cent of the world's crude, approved a record output cut of 2.2 million barrels of oil a day on yesterday.
Ministers of the 13-member OPEC, meeting in Oran, Algeria, agreed to the output reduction in a bid to shore up prices that have slumped because of falling demand in a slowing global economy since hitting record highs above $ 147 in July.
It was the third time in three months that OPEC has lowered production, and the largest reduction since the cartel introduced production quotas in 1982.
Before the latest cuts, OPEC's official daily output target was 27.3 million barrels a day but analysts said the cartel was producing slightly more than this as some members tried to boost income.
Analysts questioned whether the latest cuts would be sufficient against rapidly falling demand in a slowing global economy.