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Oil prices fall further
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November 19, 2001: 11:44 a.m. ET
Crude hits 2-1/2-year low after Russia balks at OPEC's proposed cuts.
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NEW YORK (CNN/Money) - Oil prices tumbled again Monday, hitting the lowest level in more than two years, after Russia held its ground and refused to pledge hefty production cuts that had been demanded by OPEC.
Light, sweet crude oil for January delivery fell 83 cents to $17.54 a barrel in New York while January Brent crude slipped 85 cents to $16.90 a barrel in London. The prices were the lowest since the first half of 1999.
Russia, the world's second-largest oil producer behind Saudi Arabia, Monday stood by its refusal to cut production more than it had said it would last week.
A person at the Russian Energy Ministry confirmed that, during a meeting in Moscow with Mexico's Energy Minister, Ernesto Martens, Russian officials would not go beyond the token pledge to cut 30,000 barrels a day, or just 0.1 percent of the country's production of 3 million barrels a day.
The 11 members of the Organization of Petroleum Exporting Countries, excluding Iraq, last week proposed a cut of 1.5 million barrels a day, or 6 percent of its output, but said they would implement the cuts only if non-OPEC producers made big cuts of their own.
"We are not prepared to carry out those profound cuts in our production," Russian Finance Minister Alexei Kudrin said at a meeting in Canada Sunday. "I didn't say it (30,000 bpd) was the final word...it is a matter of negotiations," he added.
Oil prices fell below $10 a barrel in late 1998 and early 1999 after Russia said it would cut production but maintained its output, except for minor seasonal adjustments. Prices finally rebounded after Mexico aided OPEC in removing enough oil from the market to drive prices up.
Mexican oil minister Ernesto Martens last week proposed a production cut of 100,000 barrels a day, or about 6 percent, in an effort to aid OPEC again.
But so far that has not been enough to convince traders that production will be cut enough to offset slowing demand.
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Shares of most U.S. oil companies dropped in tandem with crude prices. Exxon Mobil (XOM: down $0.69 to $36.85, Research, Estimates) and ChevronTexaco (CVX: down $0.94 to $82.51, Research, Estimates) both fell more than 1 percent.
But shares of Phillips Petroleum and Conoco Inc. rose Monday after the two companies announced a $15.2 billion merger Sunday.
Phillips (P: up $0.96 to $52.78, Research, Estimates) agreed to acquire Conoco (COC: up $0.74 to $25.04, Research, Estimates) for about $15.2 billion in stock, to form ConocoPhillips, which would be the third-largest oil producer and one of the biggest gasoline retailers in the United States.
Industry analysts said Russia may be trying to curry favor with western nations as it tries to reduce its debts. In addition, by going against OPEC's demands, Russia is presenting itself to the West as a stable source of energy, in contrast to the volatile Persian Gulf, the analysts said. 
-- from staff and wire reports
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