The Organization of Petroleum Exporting Countries agreed that the group’s 11 members with quotas will trim current production by 2.46 million barrels a day to 24.845 million barrels a day, OPEC president Chakib Khelil said in Oran, Algeria. OPEC has held four meetings in as many months.
Crude oil for January delivery declined $3.45, or 7.9 percent, to $40.15 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $39.88, the lowest since July 2004. Prices have tumbled 73 percent from a record $147.27 on July 11.
Inventories rose 525,000 barrels to 321.3 million barrels last week, the U.S. Energy Department said today in a weekly report. Supplies have climbed 11 percent since Sept. 19.
The cut is larger than a 2 million-barrel reduction indicated yesterday by Saudi Arabian Oil Minister Ali al-Naimi.
OPEC’s rate of compliance with a previous output cut is more than 85 percent, al-Naimi told reporters today before the ministerial meeting that decided production targets.
Russia cut oil exports by 350,000 barrels a day last month and may reduce supply a further 320,000 barrels a day next year, in collaboration with OPEC, if prices remain weak, Russian Deputy Prime Minister Igor Sechin told OPEC ministers during opening speeches at today’s meeting.
Other non-OPEC producers, including Kazakhstan, may trim production as well, Sechin said. Azerbaijan may lower production as much as 300,000 barrels a day, Azeri Energy Minister Natig Aliyev said in Oran.
OPEC will next meet in March and has no official price target, Khelil said.
Brent crude oil for February settlement declined 37 cents, or 0.8 percent, to $46.28 a barrel on London’s ICE Futures Europe exchange.
U.S. gasoline inventories rose 1.3 million barrels to 204 million barrels in the week ended Dec. 12, the Energy department report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, climbed 2.94 million barrels to 133.5 million barrels, the highest since November 2007.
Inventories have gained because the oil market is in contango, where crude for future delivery is more expensive than near-month prices, encouraging stockpile increases.
Supplies at Cushing, Oklahoma, where oil that’s traded in New York is stored, climbed 21 percent to 27.5 million barrels, the highest since May 2007.