OPEC CUTS RECORD 2.2M BARRELS A DAY

The Organisation of the Petroleum Exporting Countries (OPEC) agreed to slash 2.2 million barrels from its daily production – its single largest cut ever – while bloc outsiders Russia and Azerbaijan announced their own cutbacks of hundreds of thousands of barrels from the market. Crude oil prices sank to $40.20 after the announcement, a level not seen since the summer of 2004 and a clear sign investors are more worried that the world is heading for a long and painful recession in which energy use will continue to erode. Moscow distanced itself from direct ties with the 13-nation producers’ group, further dampening OPEC hopes of coordinated production cuts that might put a floor under crude prices. OPEC said oil ministers of the 11 nations under the group’s quota system agreed to take 4.2 million barrels a day off the market, but that includes two previously announced cuts that totalled 2 million barrels. Focusing on the shrinking oil market, OPEC noted in its statement that “crude volumes entering the market remain well in excess of actual demand.” It said, “If unchecked, prices could fall to levels which would place in jeopardy the investments required to guarantee adequate energy supplies in the medium to long term.”