Expectations of Russian Output Cut keep Oil Prices Up

Russian president Dmitry Medvedev, speaking on Russian state television today, confirmed expectations that his country would reduce oil output in coordination with OPEC at the cartel’s meeting in Algeria next Wednesday. “I would like to say that we are ready to protect ourselves as this is our base income, oil and gas,” said Medvedev, quoted by the news agency AFP.

OPEC and Russia, the world’s second-largest oil producer after Saudi Arabia, have been courting each other heavily as the price of oil has plummeted in recent weeks, with spokespersons on both sides expressing an interest in cooperation. In his remarks, Medvedev also mentioned the possibility of Russia seeking membership in OPEC.

The announcement topped off a very strong trading for oil day that included anticipation of a major OPEC production cut and predictions of demand recovery in 2009 announced by the IEA. Crude oil gained over 10% to settle at $47.98 a barrel. Heating oil rose by about 6%.

HEAT USA price experts expect a smaller price increase tomorrow, as the market price of heating oil continued to rise after today’s mid-morning price increase.

HEAT USA Price Report
Evening projection (for Friday’s average retail heating oil price per gallon): UP $0.03