SINGAPORE, Dec 18, 2008 (AFP) - Oil traded near 40 dollars a barrel on Thursday, 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 dollars a barrel, off a low of 39.19 dollars.
The contract closed at 40.06 dollars a barrel on Wednesday at the New York Mercantile Exchange, a decline of 3.54 dollars.
Brent crude oil for February delivery rose 10 cents to 45.63 dollars a barrel, off a low of 45.35, after falling 1.12 dollars to close at 45.53 Wednesday in London.
The Organization of the Petroleum Exporting Countries (OPEC), the cartel that produces about 40 percent of the world's crude, approved a record output cut of 2.2 million barrels of oil a day on Wednesday.
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 dollars 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.
Oil fell Wednesday despite a record fall in the US dollar against the euro, a day after the US Federal Reserve slashed its base lending rate to virtually zero. A weak greenback tends to lift the price of dollar-priced oil for buyers using cheaper currencies.
"If a plunging dollar and a zero interest rate can't save oil, don't think that OPEC can. The market is bigger than the cartel and the demand destruction is something that will not be cured by trying to raise prices," said Phil Flynn, an analyst at Alaron Trading.