Oil plunges to $40 on disappointing OPEC cut

December 18th, 2008 - 5:26 am ICT by IANS  

New York, Dec 18 (Xinhua) Crude oil tumbled more than eight percent Wednesday as an OPEC production cut failed to boost the bearish market sentiment over slumping demand. Light, sweet crude for January delivery slid $3.54 to settle at $40.06 a barrel on the New York Mercantile Exchange. Price fell to as low as $39.88 a barrel during the session, which is the first time for oil to drop below $40 since July 2004.

OPEC, which accounts for 40 percent of the world oil supply, announced Wednesday an output cut of 4.2 million barrels per day from its September production level.

Given OPEC’s previous cuts over the recent months, the oil cartel is actually slashing 2.2 million barrels per day starting Jan 1, 2009.

The cut failed to boost crude futures as investors already cashed the amount in the price before the announcement. Another buildup in US fuel inventories Wednesday revived investors’ concerns about the falling demand due to an economic recession.

In London, Brent crude for February delivery fell $1.12 to $45.53 a barrel on the ICE Futures Exchange.

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