OPEC members agreed on principle of oil output cut
OPEC is "virtually certain" to cut oil production when it meets in Vienna on March 16 but the cartel has yet to decide on how much, the Middle East Economic Survey (MEES) reported on Monday.
"Before finalizing an agreement on how much to cut, OPEC will take a comprehensive look at current market conditions," the Cyprus-based industry newsletter said.
It said the Organization of Petroleum Exporting Countries was "virtually certain to cut production" at the Vienna meeting and that "the principle of cutting output is supported by all member states."
OPEC oil ministers would study three key issues:
-- supply and demand projections for the rest of 2001
-- the current level of global stocks
-- how much of the price level at the time of the meeting in Vienna can be attributed to supply-demand fundamentals and how much to speculation about the meeting's outcome.
"This last factor is a new consideration for OPEC, which ... has begun taking measures to counter the effects of speculation and manipulation of markets," the weekly said.
It said attention would focus ahead of Vienna on talks expected to take place in Riyadh on March 12 between the oil ministers of OPEC giants Saudi Arabia and Venezuela with independent producer Mexico.
"The purpose of the meeting will be to discuss international oil markets and to demonstrate the continuity of the commitment by non-OPEC producers to coordinate their polices with OPEC's," said MEES.
A barrel of Brent reference crude for April delivery was selling for $26.20 on Friday, while in New York, the light sweet crude March contract gained 39 cents to stand at $28.01 a barrel.
Prices have risen amid concerns that OPEC will squeeze its output when it meets in Vienna in response to the consumer market's slowing demand.
The cartel wants prices to stabilize at around $25 per barrel. But its basket price for seven world cruds slipped to 23.64 dollars on Thursday from $23.81 on Wednesday, the cartel's OPECNA news agency reported.
To support prices, OPEC has cut output by 1.5 million bpd -- five percent of its total production -- since February 1. Consumer countries, meanwhile, have urged restraint, fearing that further cutbacks will result in a new price spiral.
Oil analysts are predicting that OPEC is headed for a cut of one million barrels per day.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)