The OPEC cartel agreed yesterday to reduce production by 2.2 million barrels a day, the group's largest ever cut, in an effort to put a floor on falling oil prices.
It is the third time producers reduced their output in as many months. Since September, members of the Organization of the Petroleum Exporting Countries have pledged cuts totaling 4.2 million barrels a day, or nearly 12 percent of their capacity, a record in such a short time.
But oil futures fell more than 3.5 percent to $39.88 a barrel briefly yesterday as the market focused on the dire state of the global economy and many experts doubted that OPEC would manage to carry out its promises, leaving markets oversupplied in the face of falling demand.
"There is still a boatload of people that are hugely skeptical," said Jan Stuart, an energy analyst at UBS.
After riding a wave of rising oil prices for nearly a decade, the world's top exporters are struggling amid a weakening global economy, a dizzying slump in oil consumption and a sharp downfall in prices. In a move reminiscent of 1998, when oil fell below $10 a barrel, OPEC asked outside producers to trim their production but seemed to find few takers.
"We want non-OPEC countries to contribute, and not just benefit from the impact of our cuts," Chakib Khelil, OPEC's current president, said after the meeting, which was held under tight security in the coastal Algerian town of Oran. "It's in their own interest as well as in ours."
Mr. Khelil said the group wanted to "eliminate" an overhang of commercial oil inventories, which now stand at 57 days of supplies, down to 52 days, and aimed to push up prices to $70 to $80 a barrel.
"We have five days of excessive stocks that could really lead to a collapse in prices," Mr. Khelil said during a chaotic news conference after the meeting.
Russia, which is not part of OPEC, sent a delegation to Algeria but analysts saw this as a gesture of political support that carried little more than symbolic value.
The oil collapse has brought down gasoline prices for consumers, but it is devastating to producers, who have based their budgets for next year assuming prices well above $50 a barrel.
The cartel has not faced such a challenging environment since the early 1980s. Oil consumption is set to decline for the first time in 25 years because of the economic crisis.