Oil fell below $64 a barrel today, to new 16-month lows, as gloom about a global economic downturn took the steam out of an Opec agreement to cut output by 1.5 million barrels a day.
Ministers of the Organization of the Petroleum Exporting Countries agreed at an emergency meeting in Vienna to take 1.5 million barrels per day off the market.
US light crude for December delivery was down $3.23 at $64.61 a barrel by 0928 GMT.
London Brent crude was down $3.41 at $62.51.
Saudia Arabia's Oil Minister Ali al-Naimi said the group had agreed the output reduction with effect from 1 November.
But news of the Opec action did not halt oil's slide.
"Already we've seen demand destruction of 2 million barrels per day. I'm not convinced this cut will be enough to stop the slide." said Rob Laughlin, at broker MF Global.
"We need to see what they plan on doing later this year."
Oil has plunged more than 50 per cent from its record high above $147 in July, as demand has dropped in the United States, the world's biggest energy consumer, and other industrial countries.
"We believe this week will mark the start of a new quota reduction cycle by Opec and it will continue through 2009," Deutsche Bank analyst Michael Lewis said in a note.
"However, we believe production cuts will not rescue the oil price," he said. "We target WTI (US) crude oil prices hitting $50 a barrel next year."
Analysts polled by Reuters had expected Opec to reduce output by between 1 million and 1.5 million barrels per day.
Investors are increasingly pessimistic about the world economy, illustrated by sharp falls in European and Asian stocks today, led by around a 10 per cent drop in Japan's Nikkei average.