By Mark Shenk Oct. 24 (Bloomberg) -- Crude oil tumbled to a 16-month low as OPEC's decision to slash production by 1.5 million barrels a day failed to ease concern that the global economic slump is curbing fuel demand. ``At this stage it looks like we are at the edge of a bottomless pit and prices are heading quickly toward $50,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``OPEC really needed to take the bull by the horns and make a bigger cut.'' The 13 members of the Organization of Petroleum Exporting Countries agreed to lower supply starting in November, oil ministers said today at a meeting in Vienna. Prices have dropped 56 percent from the record $147.27 a barrel reached on July 11 as stock markets declined. Crude oil for December delivery fell $3.69, or 5.4 percent, to settle at $64.15 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the lowest since May 31, 2007. Futures are down 26 percent from a year ago. The December contract dropped 11 percent this week, the fourth straight weekly decline. Gasoline for November delivery declined 9.99 cents, or 6.3 percent, to settle at $1.4779 a gallon in New York, the lowest since Jan. 29, 2007. ``Right now equities and the credit markets are more important than OPEC,'' said Rachel Ziemba, an analyst at RGE Monitor, an economic research company in New York. ``OPEC won't be able to support the oil market until other markets find a bottom and begin to recover.'' Markets Fall The Dow Jones Industrial Average and Standard & Poor's 500 Index followed European and Asian stocks lower amid concern the economic slump will crimp earnings. Treasuries rose as investors sought the safest assets, and the yen climbed to a 13-year high against the dollar. Copper, silver and corn fell on signs that demand for raw materials will drop as major economies shrink. ``The oil market and the Dow are moving in lockstep right now,'' said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. ``Everyone is obsessed with economic news, and the only timely news, with the exception of an occasional report, is the Dow.'' OPEC's production cut was ``one quick decision,'' Saudi Arabian Oil Minister Ali al-Naimi said in an interview. The group's president, Algerian Oil Minister Chakib Khelil, said at a news conference that the cut will be ``100 percent effective'' in stabilizing prices. OPEC's reduction will be from the existing quota for 11 members of 28.8 million barrels a day. Saudi Arabia, the group's largest producer, will curb its output target by 466,000 barrels a day. Iran, the second-biggest, will cut 199,000 barrels. Critique of Move ``I don't like the cut in production,'' U.K. Prime Minister Gordon Brown said from his home in Scotland. ``The important thing that has happened over the last few weeks, since we called for it, is that the oil price has come down by half. That needs to be passed on to the consumer.'' The Bush administration also criticized the OPEC decision, calling the move anti-competitive. OPEC will continue to watch prices and will meet as often as needed to ensure stability, Saudi Arabia's al-Naimi said after the meeting of less than two hours. ``We don't know what's going to happen in December,'' he said, referring to OPEC's next scheduled meeting in Oran, Algeria, on Dec. 17. ``The 1.5 million cut does suggest, at least somewhat, that OPEC understands it can't be behind the curve in a decreasing demand environment,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. ``If they don't react firmly, any minimal chance to regain a position of strength will disappear for the foreseeable future.'' Global Demand Global oil demand may decline for the first time in 15 years in 2008 and stagnate next year, the Centre for Global Energy Studies said in a report on Oct. 20. OPEC, the International Energy Agency and U.S. Energy Department cut their forecasts for growth earlier this month. U.S. motorists drove less in August for a 10th consecutive month even as gasoline prices fell from a record, the Federal Highway Administration said. Vehicle-miles traveled fell 5.6 percent from a year earlier, the agency said today. ``A lot of analysts have looked at OPEC and concluded that they can make a difference, a small difference, at times, but it's the market,'' Adam Sieminski, Deutsche Bank's chief energy economist in Washington, said in an interview with Bloomberg Radio. ``It's supply and demand that tends to set prices.'' Brent crude oil for December settlement declined $3.87, or 5.9 percent, to $62.05 a barrel on London's ICE Futures Europe exchange, the lowest settlement price since March 21, 2007. ``Lower prices are going to have a negative impact on consumers in the long run,'' said Kevin Kerr, president of Kerr Trading International in Wilton, Connecticut. ``Moves toward alternative fuels and conservation aren't going to occur and we won't see the massive investment that's needed for exploration and development of new fields.'' To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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