London, Nov. 26 -- Crude oil fell more than 3 percent, extending
Friday's decline, on expectations Russia won't meet OPEC's call for a production
cut next year.
Russia said Friday it will draft output targets for 2002 by Dec. 10 while
cutting 50,000 barrels a day for the rest of this year, a quarter of what the
Organization of Petroleum Exporting Countries sought. OPEC has declined to
reduce output next year unless outside competitors, of whom Russia is the
largest, pull back too.
``OPEC and Russia remain the market focus,'' said Shelley Mansfield, energy
manager at ADM Investor Services International. ``Until we get movement from one
side or the other the market will remain within 80 cents of the present price.''
Brent crude oil for January settlement fell as much as 68 cents, or 3.5
percent, to $18.60 a barrel on the International Petroleum Exchange in London.
Brent, the benchmark for two-thirds of the world's oil, has fallen about 7
percent since Russia defied OPEC on Friday.
In the U.S., crude oil for January delivery slid as much as 46 cents, or 2.4
percent, to $18.50 a barrel in electronic trading on the New York Mercantile
Exchange. The New York markets were closed Thursday and Friday for the
OPEC, which pumps two thirds of the world's oil, agreed to lower sales by 1.5
million barrels a day on condition competitors pump 500,000 barrels a day less.
So far, non-members haven't done enough, the 11-nation group's president said.
``The total in production cuts announced so far by non-OPEC countries nears
only 300,000 barrels per day and we are still awaiting more efforts,'' said
Chekib Khalil, who is also oil minister of Algeria, according to that country's
official APS news agency.
Norway, the No. 2 non-OPEC exporter after Russia, has offered to time output
by as much as 200,000 barrels a day, while Mexico said it may contribute half
that much. Oman, which borders top OPEC producer Saudi Arabia, has offered to
cut 25,000 barrels a day, about 3 percent of its production.
Russian oil production has grown by 7 percent this year to 6.9 million
barrels a day, 800,000 less than Saudi Arabia's. The Saudis, like other OPEC
members, have trimmed output three times this year to prop up oil prices as
economies and energy demand slowed.
Russia may agree to deeper cuts if oil prices fall further, analysts said.
``If the choice is between oil below $16 a barrel and cutting production by
as much as 200,000 barrels a day, then the Russians will say they will cut,''
said Steve Turner, an oil analyst at Commerzbank Securities in London.
Before Russia's talks next month Iraq, OPEC's third largest producer, will
renew the six-month contract with the United Nations that has governed its trade
since the Gulf War a decade ago. Iraq said it won't accept any changes to the
sanctions program, Agence France-Press reported, citing Foreign Minister Naji
With the U.S. fighting in Afghanistan and a global recession looming, the UN
isn't likely to risk an oil embargo from Iraq, traders said.