Monday, December 22, 2008
Supply cuts can't keep up with the precipitous decline in demand in US and Asia. So OPEC considers cutting production more than last week's 2.2 million barrel cut -- which was already a greater cut than expected.
Crude-oil futures fell Monday to below $40 a barrel as demand concerns outweighed news that the Organization of Petroleum Exporting Countries could cut production further. Crude for February delivery, the new front-month contract, ended down $2.45, or 5.8%, at $39.91 a barrel on the New York Mercantile Exchange. Crude-oil imports to China and Japan slowed in November, and inventories in the U.S. rose to their highest in seven months. Meanwhile, OPEC is mulling more production cuts, on the heels of the reduction of 2.2 million barrels a day that cartel members agreed to last week.