World oil prices have continued to fall, undermining oil cartel Opec's efforts to steady prices by cutting output by 1.5 million barrels a day.
The decision to cut about 5% of the cartel's total daily output came after an emergency Opec meeting in Vienna.
The move did not halt the sliding oil price with US sweet, light crude down $3.69 at $64.15 after wild swings saw greater falls in earlier trade.
Recession fears have pulled oil down from a high of $147 a barrel in July.
The sell-off also hit London Brent, down $4.40 at $61.52.
Dramatic collapse
In a statement after the meeting, Opec said it had cut output because supply outpaced demand, and prices had collapsed dramatically in recent weeks.
The cut will take effect from 1 November.
The 13-nation producers group, responsible for producing about 40% of the world's total supply, said it would continue to provide the market with the crude oil volumes required by consumers.
Analysts had expected Opec to cut output by at least one million barrels a day and some producers - such as Venezuela and Iran - wanted greater cuts.
More cuts?
OPEC President Chakib Khelil said because Opec members produce about 300,000 barrels a day more than the official quota of close to 29 million barrels, the total reduction by the end of the year would be about 1.8 million barrels a day.
Mr Khelil rejected the suggestion that the decision would hurt the global economy.
"There's not going to be any impact on inflation, there's not going to be any impact on growth."
Opec oil ministers said that they would review their decision at their next meeting in December, leaving open the possibility of further cuts beforehand if necessary.
Revenue worries
Observers said that the failure of oil prices to climb suggested that Opec was losing its power.
"The power to influence oil prices is moving farther and farther away from Opec," said oil analyst Stephen Schork.
"Everyone thought China and India would go on buying oil forever, but that's not the case. The demand is no longer there. People fooled themselves when they said emerging markets could weather a US downturn."
Ahead of the meeting, some of the cartel's members called for a reduction in output to stop the fall in prices: Venezuela wanted production to be cut by a million barrels a day, while Iran had called for a cut twice that size.
The two countries are thought to be most in need of a relatively high oil price - around $100 a barrel - to finance government spending, says the BBC's economics correspondent, Andrew Walker.
Iran relies almost entirely on its oil exports for government revenue: for every dollar off the price of a barrel of oil, the country loses roughly $1bn a year in revenue.
But British Prime Minister Gordon Brown warned that any reduction made in a bid to push up oil prices would be "scandalous" at a time when major economies were close to tipping into recession.
Motorists benefit
Oil prices hit an all-time high of $147 a barrel in July, but have since fallen back steadily.
Prices now stand at levels not seen since last spring, amid fears a global economic recession will cut demand.
The price that motorists have been paying for petrol at forecourts has been falling recently.
A price war has broken out among leading UK supermarkets with Asda, Sainsbury's, Tesco and Morrisons all announcing cheaper petrol on Friday.
But some observers believe moves to reduce production could reverse that trend.
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