The New Nation - Internet Edition

AFP, SINGAPORE

Oil prices eased by more than two dollars in Asian trade yesterday after big gains on anticipation that Russia and OPEC will cut production to bolster prices, dealers said.

In afternoon trade New York's main contract, light sweet crude for January delivery, dropped 2.21 dollars to 45.77 dollars a barrel after rising 4.46 dollars, more than 10 percent, to 47.98 at the close of trading Thursday on the New York Mercantile Exchange.

The market was down by about one dollar in morning trade but fell further after the United States Senate failed to reach a deal on bailing out the auto industry.

Brent North Sea crude for January fell 2.04 dollars to 45.35 dollars after rising 4.99 dollars, or 11.77 percent, to 47.39 dollars in London on Thursday.

"I think the market may have got a bit ahead of itself," said Mark Pervan, senior commodities analyst with ANZ bank in Melbourne.

Oil prices have plunged from record highs above 147 dollars in July as energy demand slows in a weaker global economy.

The Organisation of the Petroleum Exporting Countries (OPEC), which pumps about 40 percent of world crude, has already agreed on cuts of 2.0 million barrels per day this year. It has also called on non-members to play a role in reducing output.

Russia, the world's biggest crude producer which is not a member of OPEC, is ready to join forces with the cartel to stem the plunge in crude prices and could even become part of the group, Russian President Dmitry Medvedev said Thursday.

A Russian production cut could support the oil market, Pervan said, but he added: "History tells you that the Russians tend to say a lot of things and not actually deliver."

OPEC's ability to influence prices depends on whether the market believes the group will actually limit its production. Some countries cheat at the expense of others by failing to implement cuts, thereby increasing their revenues.

The International Energy Agency (IEA) said Thursday that the 13-member OPEC had been unable to stick to its targets, with some countries -- notably Ecuador, Venezuela, Libya and Iran -- making "relatively limited" reductions to their output.

OPEC cut its production by 760,000 barrels per day to 31.3 million bpd by the end of November as demand fell, the IEA said. It noted that most of the cuts came from Gulf states.

IEA, the energy policy adviser to major industrialised countries, forecast that global oil demand would fall this year for the first time in 25 years because of a worldwide economic slowdown.