11/19 10:22 Crude Oil Falls After Mexico Fails to Get Further Russian Cuts By Mark Shenk

New York, Nov. 19 (Bloomberg) -- Crude oil fell to a 2 1/2- year low after Mexico failed to get a commitment from Russia to trim output in coordination with OPEC and other producers.

Russia's Energy Minister Igor Yusufov would only agree to help ``stabilize oil prices.'' Mexico, which was part of past efforts by OPEC to rein in output and boost prices, sought more than the reduction of 30,000 barrels a day, or 0.4 percent, that Russia had already pledged. OPEC last week said it wouldn't reduce output unless other producers made similar cuts.

``Nothing came out of the meeting between Mexico and Russia, which raises the potential of a price war,'' said Craig Gile, an energy derivatives trader at Citibank NA in New York.

Crude oil for December delivery fell as much as $1.33, or 7.4 percent, to $16.70 a barrel on the New York Mercantile Exchange, the lowest price June 1999. Prices are 52 percent lower than at this time last year.

In London, Brent crude oil for January settlement fell as much as $1.05, or 5.9 percent, to $16.70 a barrel on the International Petroleum Exchange, also the lowest price since June of 1999.

Mexico, which produces about 3.5 million barrels of crude oil a day, and other non-OPEC producers such as Norway and Oman, reduced production in coordination with the Organization of Petroleum Exporting Countries after prices fell to 12-year lows close to $10 a barrel in December 1998.

Yusufov and Mexican Energy Secretary Ernesto Martens met today to discuss OPEC's plan to end a mounting glut. Russia is the second-biggest exporter of oil after Saudi Arabia, while Mexico is the 10th. The International Energy Agency estimates that 1 million barrels of surplus crude oil is pumped every day.

Kuwait's oil minister, Adel al-Subaih, said Thursday that oil prices may fall back to $10 a barrel if producers don't decrease output together.

New York futures prices have dropped 39 percent since the Sept. 11 terrorist attacks, as traders have been more concerned about weakening demand during an economic slowdown than any possible disruption in Middle East supplies during the U.S. military action in Afghanistan

-- Anonymous, November 19, 2001

Answers

The more the basic price falls, the better it is for the airlines, as their jet fuel prices go down. Good for us regular consumers too!

-- Anonymous, November 19, 2001

OG, Our gas prices are down to $1.28 per gallon regular unleaded. Great prices for this area. I am going to put away about 50 gallons next week.

-- Anonymous, November 19, 2001

Just one more reason that the arab nations should do what they can to curb terrorism, now that it is affecting our recession. As I recall, it was the Asian flu a few years ago that last drove down petroleum prices which in turn was a factor in our own economic expansion until a year ago. So, we have a potential problem. If things turn around too quickly, there may not be enough petroleum available at that time. I don't agree with how the Strategic Petroleum Reserve operates, but at least Bush is trying to replenish it at a time when prices are down.

-- Anonymous, November 19, 2001