Oil prices have risen to more than $103 a barrel, reversing earlier losses, after OPEC agreed to return to its late 2007 production levels.
Brent crude has fallen back below $100 a barrel as signs of weaker global oil demand has offset Opec's surprise decision to reduce output levels.
After talks in Vienna, Opec president Chakib Khelil said the measures to curb over-production amounted to a cut of 520,000 barrels a day within 40 days.
Despite initially rising following Opec's announcement, Brent was down $1.67 to $98.67 by evening in Europe.
Meanwhile, the International Energy Agency (IEA) cut its estimate for global oil demand this year and next.
US light crude was also lower, falling $1.41 to $101.85 a barrel.
In New York the main October US light crude future stood at $103.34 a barrel.
After talks in Vienna, Opec's member states decided to cut daily production levels by 520,000 barrels, starting within 40 days.
Prices have sunk from a record of more than $147 a barrel seen in July.
'Changing lifestyles'
On Tuesday Brent crude had dropped beneath $100 a barrel for the first time since April, and crude prices remain close to $100, below which Goldman Sachs said earlier this week could signal a global recession.
While the news initially saw oil prices rise, they then fell back, helped by the International Energy Agency (IEA) cutting its estimate for global oil demand this year and next.
The fall from the record prices in July has helped the US dollar, which hit an 13-month high against the euro on Tuesday.
The IEA - which had asked Opec to keep its output unchanged - said consumers in industrial nations were changing their lifestyles in response to high prices.
On Wednesday the IEA - which had asked Opec to keep its output unchanged - said consumers in industrial nations were changing their lifestyles in response to high prices.
Oil's fall from the record prices seen in July has helped the US dollar, which hit an 13-month high against the euro on Tuesday.
Supply question
The price has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil.
The price has since fallen by nearly 30% as a global economic slowdown has reduced demand for oil.
Supply has also been increased in recent months by some Opec members - principally Saudi Arabia.
Opec members will re-assess production levels when the meet again at the end of the year.
Meanwhile, Indonesia has suspended its membership of Opec.
The 13-nation group, whose members include Saudi Arabia, Iran and Venezuela, has around two-thirds of the world's known oil reserves.
Actions [to curb output] will be taken by members as soon as they can Chakib Khelil, Algerian oil minister Q&A: volatile oil prices
"The conference regretfully accepted the wish of Indonesia to suspend its full membership in the organisation and recorded its hope the country would be in a position to rejoin the organisation in the not too distant future," Opec said in a statement.
After the late-night talks in Vienna, the group announced it had decided to "strictly" comply to the production ceilings agreed in September last year, which amount to 28.8m barrels a day excluding Indonesia and Iraq.
It linked the falling price of oil to slowing economic growth, a stronger US dollar, easing geo-political tensions and greater supply.
"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook," a statement said.
Output curbs
The effect of the measures will be a cut of about 520,000 barrels a day, according to Algerian Oil Minister Chakib Khelil, who chaired the meeting.
"Actions [to curb output] will be taken by members as soon as they can, that means in the next 40 days," he said.
Opec members will re-assess the situation when the meet again at the end of the year.
The BBC's Bethany Bell in the Austrian capital says the move is a compromise meant to avoid new turmoil in the oil markets, but it also reflects Opec's attempts to stop the recent falls in global prices.
