Oil prices fell by more than $2 a barrel this evening after Russia and Ukraine signed a 10-year gas deal clearing the way for the resumption of supplies to Europe.
US crude dipped to a low of $33.89, down $2.62, before recovering to trade at $34.53. London Brent crude fell to a low of $43.80, down $2.77, before edging back up to around $44.50.
The agreement between Russia and Ukraine, which set a final price for 2009 supplies, is expected to lead to the restart of flows of Russian natural gas to Europe via Ukraine within the next 36 hours.
Prices came under pressure on Friday after the International Energy Agency, an adviser to industrialised countries, predicted a fall in world oil demand in 2009.
OPEC, the oil exporters' group, has cut production three times since September to try to stem falling prices. It might consider reducing output again, Algeria's oil minister Chakib Khelil said on Saturday.
