Updated from 2:02 p.m. EST
So much for setting a floor for oil prices.
Crude oil plunged Friday, closing at a four-month low, even though OPEC decided to reduce production amid a steep price correction.
The January futures contract lost $1.82 to $40.71 a barrel, some 26% below the record closing high of $55.17 touched Oct. 26.
OPEC members meeting in Cairo agreed to a cut of 1 million barrels a day to the cartel's official production level of 27 million barrels a day, according to media reports. The reduction is effective Jan. 1.
Since July, the cartel has raised production on three separate occasions by a total of 2.5 million barrels a day, as it tried to cool the commodity's steep price appreciation.
After hitting a record high six weeks ago, prices have fallen on a regular basis, including a 14% selloff last week. Against that backdrop, the cartel is now worried about a possible collapse in price similar to the one that occurred in the mid-1990s.
Unseasonably warm weather in the northeastern U.S. and ample heating oil supplies have depressed prices.