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Oil falls $4 as OPEC cut fails to halt slide

Business Materials 24 October 2008 23:45 (UTC +04:00)

Oil dropped more than $4 a barrel on Friday as gloom about a global economic downturn sapping fuel demand took the steam out of an OPEC agreement to cut output, Reuters reported.

Ministers of the Organisation of the Petroleum Exporting Countries agreed at an emergency meeting in Vienna to take 1.5 million barrels a day of crude, about 5 percent of its supply, off the world market.

U.S. light crude for December delivery traded down $4.20 at $63.64 a barrel by 2:05 p.m. EDT (7:05 p.m. British time). It fell as low as $62.65, its lowest since May 2007.

It has fallen more than $40 a barrel in a month.

London Brent crude was down $4.40 at $61.52.

Saudia Arabia's Oil Minister Ali al-Naimi said the group had agreed the output reduction with effect from November1.

Traders said OPEC's action might not be enough to arrest a slide that has seen oil down more than 50 percent from a record $147 a barrel in July.

"Already we've seen demand destruction of 2 million barrels per day. I'm not convinced this cut will be enough to stop the slide," said Rob Laughlin, at broker MF Global.

The U.S. Energy Information Administration said this week that oil products demand in the world's biggest energy consumer during the previous four weeks was 18.7 million barrels per day, down 8.5 percent from a year ago.

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