OPEC reduces oil production; 1st round
OPEC reduces oil production, but prices continue to decline
By Mark Williams | The Associated Press
October 25, 2008
COLUMBUS, Ohio - Crude tumbled Friday, even as OPEC announced a huge production cut in an attempt to halt the decline.
Crude prices have now fallen 56 percent from the highs reached in July, and more than $41 per barrel in just the last month.
Gathered in Vienna, Austria on Friday, OPEC announced it would slash oil production by 1.5 million barrels a day. Oil prices plunged 5 percent.
Investors paid little heed to OPEC's attempts to limit supply, instead focusing on global demand as financial markets spiraled downward in Asia, Europe and the United States.
Light, sweet crude for December delivery fell $3.69 to settle at $64.15 a barrel on the New York Mercantile Exchange. Prices had fallen as low as $62.85 earlier in the day.
The continuing decline in oil prices, even in the face of large OPEC cut, only cemented bearish sentiment on the oil market.
"All OPEC confirmed for the market is how weak demand is," oil trader and analyst Stephen Schork said.
Supporting that view was a report released Friday by the U.S. Department of Transportation that showed the largest monthly decline in miles driven in 66 years.
In the month after gas prices peaked at $4.11 per gallon, Americans drove 5.6 percent less, or 15 billion fewer miles, in August 2008 compared with August 2007 - the biggest single monthly decline since the data was first collected regularly in 1942.
Americans have drastically altered driving habits, if they are driving at all, amid a severe economic downturn.
A Labor Department report released this month showed that the number of people who have become unemployed over the last year has risen by 2.2 million to 9.5 million. From November through August, Americans drove 78.1 billion fewer miles than they did over the same 10-month period a year earlier. The Transportation Department said the biggest decline in driving was in Florida, where miles traveled fell by 9.7 percent. Driving in the south Atlantic region, including Florida, fell 7.4 percent, the most of any region in the country.
$64.15 Friday's price for a barrel of oil for December delivery
$41 Decline in the per-barrel price in the last month
56% Decline in the per-barrel price since July's high
contact Obama! 