Oil prices have tumbled, diving under USD 38 per barrel, as traders suggested that OPEC may not cut the output.On the New York Mercantile Exchange, light sweet crude for delivery in January dived to USD 37.68 a barrel ahead of the contract's expiry on Friday. The low point was last seen in July 2004. On London's InterContinental Exchange (ICE), Brent North Sea crude for February sank as low as USD 44.30.
In later deals, New York crude stood at 38.55, down 1.51 dollars from the close on Wednesday. Brent oil was 53 cents down at USD 45 per barrel.
Organization of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world's crude, approved a record output cut on Wednesday of 2.2 million barrels a day.
However, the decision failed to prevent prices plunging even further, as rising US energy reserves also heightened global demand worries amid a sharp worldwide economic slowdown. "The verdict (of falling prices) was a resounding vote of no-confidence in the cartel's ability to curtail production given its previous tendencies to backslide on commitments, particularly by countries who are financially strapped," said MF Global oil analyst Ed Meir.
Despite the output reduction on Wednesday, New York crude dropped a hefty USD 3.54 dollars and London Brent oil shed USD 1.12.