NEW YORK - Oil closed below US$40 a barrel for the first time in about three weeks as another round of poor company earnings and job cuts overshadowed an OPEC announcement Monday that dozens of production projects were being tabled.
Light, sweet crude for March delivery fell 61 cents to settle at $39.56 a barrel on the New York Mercantile Exchange. Oil prices jumped earlier in the day to $42.43 as OPEC Secretary General Abdalla el-Badri's announced that the cartel would postpone 35 of 150 new oil and gas projects.
El-Badri said the group would likely fall short of its goal to raise production capacity by five million barrels per day by 2012, according to a research note by analyst Addison Armstrong. The OPEC secretary also said the cartel is close to completing its previously announced cut of 4.2 million barrels per day.
Crude producers have been hit hard by falling prices, but industry experts warn that taking production projects off line is short-term thinking.