OPEC makes deepest oil cut ever

The cut, effective Jan. 1, comes atop existing curbs of 2 million bpd agreed by OPEC since September. It lowers the supply target for the 11 members bound by output limits to 24.845 million bpd 8212; down nearly 15 per cent from September output.

8220;I hope we surprised you 8212; if not, we have to do something about it,8221; said OPEC President Chakib Khelil, host of the conference.

Oil fell more than 3 a barrel towards 40 following the deal after weekly US data showed inventories in the world8217;s biggest consumer continued to swell.

Washington quickly condemned OPEC8217;s attempts to end cheaper oil prices. Its cut, the third this year, brings a total reduction in OPEC supply to 4.2 million bpd, taking nearly five per cent of world supply off the market.

8220;OPEC has an obligation to keep the market well supplied and to consider the health of the global economy, so efforts to limit the benefits of lower energy prices are short-sighted,8221; said White House spokesman Tony Fratto.

A deepening recession is threatening to shrink world demand for two years running and fuel inventories are bulging. Prices already have plunged by two-thirds since the summer and analysts say the oil market is under the sway of world financial turmoil.