OPEC slashes output by 1.5 million barrels per day

Analysts had expected the Organization of Petroleum Exporting Countries (OPEC) to cut its daily output by at least one million barrels per day as a global economic slowdown amid a worsening financial crisis slashes demand for energy.Â

 

Ministers of the OPEC began an emergency meeting in Vienna that could decide to reduce output by at least a million barrels.

 

Oil fell below $66 a barrel on Friday, to new 16-month lows, pressured by gloom across all markets about a global economic downturn that could reduce the impact of any cut in oil output from OPEC.

 

U.S. light crude for December delivery was down $2.68 at $65.16 a barrel by 0844 GMT, erasing earlier gains.

 

London Brent crude was down $2.56 at $63.36.

 

Oil has plunged more than 50 percent from its record high above $147 in July, as demand has dropped in the United States, the world's biggest energy consumer and other industrial countries.

 

Investor pessimism about the world economy was highlighted by sharp falls in European and Asian stocks, led by around a 10 percent drop in Japan's Nikkei average.

 

Even gold, a traditional safe haven, was down 4 percent as the U.S. dollar rose.

 

Bleak outlooks from world car makers and a barrage of job cuts by major U.S. companies has provided evidence the financial crisis is spilling over into the real economy.

 

"If it wasn't for an expected OPEC cut, there is a strong possibility that oil prices would be falling a lot more considering how poorly Asian stocks are performing," David Moore, a commodities strategist at the Commonwealth Bank of Australia, told Reuters.

 

Photo: AP