Page last updated at 16:53 GMT, Wednesday, 26 November 2008

Oil rises as Russia threatens cut

Siberian oil rig
Russia has hinted it may cut output ahead of the Opec meeting

Oil prices have risen after Russia said it might join producers' cartel Opec in cutting output, and following a fall in the US dollar.

China's interest rate cut also boosted prices on hopes the move might prevent a slowdown in the country's growth.

The developments helped counter more dour economic news and larger-than-expected fuel stockpiles.

US light, sweet crude climbed 83 cents to $51.60 a barrel. Brent crude rose 58 cents to $50.93 a barrel.

On Tuesday oil prices had fallen by more than $3.50 a barrel.

The dollar declined on Wednesday against the yen after new economic data from the US suggested the downturn was deepening.

Demand fears

Analysts say that the latest steps taken by governments to boost the global financial market and economy have had little effect on oil prices.

"There's been a lot of money thrown at the system and it hasn't done a lot yet," said Mark Pervan at ANZ bank in Melbourne.

Oil markets fear that the global economic downturn will dramatically reduce demand for crude.

The price of oil has fallen sharply from its record of more than $147 a barrel in July.

Opec, which accounts for about 40% of global oil production, cut output by 1.5 million barrels a day last month, but the move failed to stop prices from declining.

Russian output

Some of the cartel's members have been calling for a new cut at an Opec meeting in Cairo on 29 November.

And Russian energy minister Sergei Shmatko said his country would "co-ordinate with Opec to defend its interests."

Russia has been criticised by some analysts for increasing output for several years while Opec was cutting production to support oil prices.

Russia, one of the world's leading oil exporters, is not a member of the cartel.

Russia's Ural crude oil costs now less than $50 per barrel, while the Russian budget assumption for this year is $75 a barrel and for $95 a barrel in 2009.

The country's oil output stood at 491 million tonnes (3.7 billion barrels) in 2007 and will stay at the same level in 2008, according to a revised government forecast.

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