By the OGJ Online Staff
LONDON, Nov. 26 -- London oil traders continued to mark down the price of North Sea Brent crude following Russia's decision not to support the Organization of Petroleum Exporting Countries in making output cuts.
The New York Mercantile Exchange was closed Thursday and Friday for the Thanksgiving holiday, but the January contract for benchmark US light, sweet crudes dipped to $18.77/bbl in after-hours electronic trading early Monday, while the February contract fell to $19/bbl.
Oil prices were expected to continue that decline when trading resumed in the NYMEX.
Brent oil trades for January settlement closed at $19.28/bbl Friday, down 62¢ for the day after trading at $18.60-$20.02/bbl on the London International Petroleum Exchange. The December natural gas contract also lost 4.6¢ to the equivalent of $3.55/Mcf on the IPE.
By early Monday, IPE prices for Brent crude -- the benchmark for more than 60% of the world's oil -- had fallen about 7% since Friday, when Russia announced that its proposed cuts in output would fall far short of OPEC expectations.
Russia, the largest oil exporter outside OPEC, said Friday it might offer a bigger reduction of its exports by Dec. 10, its deadline for deciding 2002 production. Meanwhile, Russian officials said oil companies in that country are reducing exports by 50,000 b/d for the rest of 2001, a quarter of the amount sought by OPEC.
OPEC Pres. Chekib Khalil, who is also oil minister of Algeria, reiterated over the weekend that the cartel would not reduce its production quotas by another 1.5 million b/d in January unless competitors also reduce their exports by 500,000 b/d. He said, "The total in production cuts announced so far by non-OPEC countries nears only 300,000 b/d, and we are still awaiting more efforts."
He said OPEC officials are still in discussions with non-OPEC producers "to convince them that efforts to stabilize oil prices have to be a common stand."
Norway, the second-ranking non-OPEC exporter, offered to cut as much as 200,000 b/d a day, while Mexico said it may contribute half as much. Oman, which borders Saudi Arabia, offered to cut 25,000 b/d, about 3% of its output.
Russian oil production grew 7% this year to 6.9 million b/d, compared to current daily production of 7.7 million b/d by Saudi Arabia, the world's top supplier. Saudi Arabia and other OPEC members trimmed production three times during 2001 in a vain effort to halt the decline in oil prices.
Meanwhile, Iraq -- once OPEC's third-largest producer -- is again coming up for renewal of the 6-month oil-for-aid contract with the United Nations that has governed Baghdad's trade since the war a decade ago. As usual, Iraqi officials have already declared that they won't accept any changes to the sanctions program.
