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oilprices surge

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    Oil prices surge

    From correspondents in London

    Agence France-Presse

    December 12, 2008 06:25am

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    OIL prices jumped $US4, or almost 10 per cent, today as Russia said it was ready to join forces with OPEC and cut output.

    Traders set aside forecasts of the first drop in oil demand in 25 years in anticipation of joints efforts by the Organisation of Petroleum Exporting Countries and Russia to slash production in a bid to propel prices.

    Light sweet crude for delivery in January jumped $US4.16 to $US47.68 a barrel on the New York Mercantile Exchange (NYMEX).

    On London's InterContinental Exchange (ICE), Brent North Sea crude for January rallied $US4.33 to $US46.73.

    Russia is ready to join forces with OPEC to stem the plunge in crude prices and could even become part of the oil cartel if membership were in Moscow's interests, Russia President Dmitry Medvedev said today.

    "Our partners, colleagues from the oil club (OPEC) are asking us to have a coordinated policy and whoever I meet, they are asking quite actively," he said in remarks broadcast on state television.

    "I would like to say that we are ready to protect ourselves as this is our base income, oil and gas," said Mr Medvedev, who was on a visit to the town of Kurgan outside Moscow.
    Related Coverage

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    "Such protective measures can be linked to a reduction in oil production volumes, joining existing organisations of suppliers as well as participation in new organisations, if we can agree about this ahead of time," he said.

    Russia is not an OPEC member but ranks alongside Saudi Arabia, de facto leader of the cartel, as the world's largest oil exporter.

    His comments came ahead of a meeting of 13-member OPEC on December 17 where coordination with non-OPEC oil producers like Russia is expected to be a major issue.

    The cartel is widely expected to cut production in an effort to bolster prices that have plunged from record highs above 147 dollars in July.

    OPEC, which pumps 40 per cent of world crude, has called on non-members to play a role in reducing output to stem the sharp slide in crude prices of the last five months.

    Meanwhile, today the oil market largely ignored the International Energy Agency's (IEA) forecast that global oil demand would fall this year for the first time since 1983 owing to a worldwide economic slowdown.

    "Global oil demand is now expected to contract in 2008 for the first time since 1983, shrinking by 0.2 million barrels per day, with the total (daily demand) this year revised down by 350,000 bpd to 85.8 million bpd," the IEA said in its latest monthly report.

    In 2009, demand will grow again to a downwardly revised 86.3 million bpd, the IEA said, basing its forecasts on International Monetary Fund projections for a pick-up in the global economy next year.

    The Paris-based IEA had previously predicted oil demand for this year and next at 86.2 million and 86.5 million bpd, respectively.
 
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