OPEC makes biggest production cut ever

Oil ministers in Algeria Wednesday announced a 2.2 million barrel per day production cut, the largest one-time pull back in OPEC history.

The Organization of Petroleum Exporting Countries has made three cuts totaling 4.2 million barrels per day since late summer, a 12 percent drop from its previous 29.045 million barrel-per-day quota.

The new quotas take effect Jan. 1, 2009, the statement said.

Crude volumes entering the market remain well in excess of actual demand: this is clearly demonstrated by the fact that crude stocks in OECD (Organization for Economic Co-operation and Development) countries are well above their five-year average and are expected to continue to rise, the statement said.

After the meeting, OPEC President Chakib Khelil asked for non-member countries to also cut production. We want non-OPEC countries to contribute, he said, The New York Times reported. It’s in their own interest as well as in ours.

Oil prices have fallen dramatically from a peak of $147 per barrel in July. On Wednesday, prices on the New York Mercantile Exchange skidded in the morning, then rose to $40.35 per barrel.