Crude oil traded below $50 a barrel in New York Monday for the first time since the spring of 2005 as talk of an OPEC production cut later this month failed to convince jittery investors.

Oil futures slid 10.3%, or $5.63, to $48.80 per barrel, on the New York Mercantile Exchange, dragging down shares of the major oil companies with it. American depositary receipts of BP (nyse: BP – news – people ) fell 10.5%, or $5.12, to close at $43.57, in New York, and ADRs of Royal Dutch Shell (nyse: RDSA – news – people ) slumped 10.2%, or $5.45, to close at $48.00. The overall stock market was almost as weak, but sliding commodities prices could have been as much cause as effect.

“The major motivation for sellers is the discounting of the OPEC decision,” said Mike Fitzpatrick, vice president of MF Global, in a report, “but motivation is not hard to find as the elements propelling prices from 2003 on have largely dissipated.”

Surging demand from emerging economies sent oil and other commodities on a six-year rally, but prices have tumbled since July as the global economic crisiserodes demand in the United States and other big developed consumer nations.

The Organization for Petroleum Exporting Countries made no changes to its production quotas at an informal meeting in Cairo over the weekend–as expected–and an almost-certain cut later in December is not bringing any sense of confidence back to the energy markets.

“The OPEC meeting last weekend shows you that there’s not a lot the group can do to stop the free-fall in oil prices. On top of that, the latest U.S. manufacturing data is playing into the market psychology,” said analyst Phil Flynn of Chicago-based Alaron Trading. “The weakness in the manufacturing sector foretells a bad demand picture for oil.”

The cartel is, to a large extent, a victim of bearish market sentiment rather than its own quotas. It is difficult to see how frantic cutting would help OPEC, given that it needs to make sure its already-wavering credibility does not suffer in an environment of falling prices. The 13-member group has only just pushed through a cut of 1.5 million barrels, announced in October, which needs to be proven right rather than immediately increased.

“OPEC has done all it could do,” said Catherine Hunter, an analyst with IHS Global Insight. She told Forbes.com it was “just too early” to announce a cut over the weekend, so soon after last month’s 1.5 million-barrel cut, and that the cartel’s next meeting in Algeria on Dec. 17 would be a much better time to unveil a cut of between 1.0 and 2.0 million barrels. (See “OPEC’s Prelude To A Cut.”)

OPEC’s secretary general said the cartel is ready to cut production by a significant amount at next month’s meeting. “We are all geared towards a cut in Algeria,” Abdullah al-Badri told a news conference in Tehran, two days after the group’s meeting in Cairo. “The market is oversupplied because we are seeing stocks as very high, about 55 to 56 days,” he said eariler.

Energy Minister Chakib Khelil of Algeria told reporters in Cairo on Saturday that last month’s announced cut was being implemented, according to “preliminary industry indications,” and that OPEC member countries were clearly sticking to their promises. Mounting a unified front is crucial for OPEC in the current climate, with skeptics doubting the ability of countries like Iran and Venezuela to sacrifice valuable oil revenues for the greater good.

But the mooted target of $75 per barrel, described as a “fair price” by King Abdullah of Saudi Arabia in an interview with a Kuwaiti newspaper, still seems elusive. The global slump has even taken the wind out of commodity-hungry China, which the World Bank expects to grow at an 18-year low of 7.5% next year.

The iPath S&P GSCI Crude Oil Total Return (nyse: OIL –news – people )exchange-traded fund, which is linked ot the price of New York crude, fell 4.9%, or $1.49, to $28.68.

Reuters contributed to this article.

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