Russia Resists OPEC Request for Supply Cut

Oil prices fell sharply Monday after Russia failed to offer much hope that it would meet OPEC’s demands and join the cartel in making supply cuts, but light late buying helped the market close higher.

London Brent blend futures touched a 21/2-year low of $16.65 a barrel but ended at $18.05 a barrel, up 26 cents, after automatic buying levels were triggered and some players took profits on short positions in thin trade.

“The market was just oversold,” said one trader on London’s International Petroleum Exchange. “But volume has been very low this evening, and all the news remains very bearish.”

Traders said news that the United States was singling out Iraq--as well as North Korea and probably Iran--as a violator of a ban on biological weapons heightened worries about any action that could endanger Baghdad’s 2.1 million barrels per day of crude exports.

Market sentiment remained bearish after the Organization of Petroleum Exporting Countries opted last week to defer any production cut until Russia sliced its own output.

Russian Energy Minister Igor Yusufov, in a meeting in Moscow on Monday with his Mexican counterpart, Oil Minister Ernesto Martens, offered no new reductions, an Energy Ministry source said.

“Of course not,” the source said. “The subject of the talks was about making consultations and information exchange between non-OPEC states more active,” he added.

Martens had proposed a cut in Mexico’s exports of 100,000 barrels per day, about 6%, to help OPEC.

Russia, which is the world’s second-biggest oil exporter, has proposed only a tiny reduction of 30,000 barrels per day, just 0.1% of its 3 million barrels per day of exports.

On Sunday, Russian Finance Minister Alexei Kudrin said Moscow was prepared to negotiate but would not make large reductions.