OTTAWA -- Oil markets gave a sharply negative review yesterday to OPEC's decision to slash production by a further 2.2 million barrels a day, as crude prices fell below $40 (U.S.) a barrel for the first time in more than five years.
At a meeting in Algeria, ministers from the Organization of Petroleum Exporting Countries agreed to cut supplies by a total of 4.2 million barrels a day below September levels. The cartel had already agreed to rein in production by two million barrels at two separate meetings this fall.
However, traders responded to the largest OPEC cut yet by driving down the price of crude, and analysts said the action was too little, too late to prevent a further erosion in oil prices early next year.
"Markets are saying, it's not enough, it's insufficient" said Dina Cover, commodity economist with the Toronto-Dominion Bank.