Oil prices fall despite OPEC output cut

A historic supply cut by OPEC meant to raise the price of oil, instead sparked a sharp drop to a four-year low today that added to the sense of gloom over beating back the global economic slowdown.

The oil market displayed its pessimism by pushing prices down more than 6 percent, briefly nearing $40 a barrel, after OPEC said it was cutting supply by 2.2 million barrels per day to help raise prices.

Dealers said it would not be enough to counter slumping world energy demand.

The price of oil has dropped more than $100 a barrel from a high of $147 in July.

Optimism over the Federal Reserve's unprecedented cut in rates on Tuesday to near zero faded today as investors wondered what the Fed had left in its arsenal to tackle the year-long U.S. recession that is dragging down the global economy.

Following the Fed's surprise move to cut the benchmark rate to a range of zero to 0.25 percent from 1 percent, Norway, Hong Kong, Kuwait and the Czechs all lowered rates. The Fed's dramatic decision could push the Bank of Japan to cut rates from 0.3 percent on Friday.