Business | Oil & Gas
Oil hovers near four-year low despite Opec production cut
Oil steadied around $40 a barrel on Thursday, near its lowest in more than four years, despite Opec's biggest ever production cut.
- Agencies
- Published: 10:01 December 18, 2008
- Image Credit: Gulf News Archive
- Opec said it would cut 2.2 million barrels daily of output starting January 1
Singapore: Oil steadied around $40 a barrel on Thursday, near its lowest in more than four years, despite Opec's biggest ever production cut.
US light crude for January delivery, which expires on Friday, fell 2 cents to $40.04 a barrel by 0128 GMT, after falling to $39.19 earlier in the session, the lowest since July 2004.
London Brent crude for February rose 2 cents to $45.55.
Oil fell as low as $39.19 a barrel, extending Wednesday's 8.1 percent decline on rising US stockpiles and Opec's production cut.
The Organisation of the Petroleum Exporting Countries announced on Wednesday that it would cut 2.2 million barrels daily of output starting January 1, slightly more than expected.
This closely follows cuts of 2 million barrels a day (bpd) since September, which failed to boost oil prices, deepening the gloom over demand instead.
But with a steep fall in demand, Opec's move may not be enough to halt oil's almost three-quarters dive since its July all-time peak above $147.
"Countries other than the Saudis are going to have difficulty to comply with this cut. Those oil producing countries, if they want to survive, they have to produce, even at $40 oil," said Tetsu Emori, fund manager at Astmax Co Ltd in Japan.
"Prices have to head lower, now that we are through $40. As long as demand continues to weaken, prices will weaken too."
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