** $16-25/bbl. **Estimates of exporters for Oil Prices later this year.

greenspun.com : LUSENET : TB2K spinoff uncensored : One Thread

Friday March 17 11:39 AM ET

Oil Stems Losses As OPEC Debates Supply Move LONDON (Reuters) - World oil prices stemmed recent losses on Friday, as dealers took stock ahead of OPEC's end-month meeting to decide new supply policy.

North Sea benchmark Brent Blend crude for May delivery was 12 cents firmer by 1615 GMT at $26.90 a barrel. U.S. light crude oil futures were down just four cents at $31.05 a barrel.

Prices have steadied after losses of over 16 percent in little more than a week as dealers sold crude futures in anticipation of an OPEC deal to hoist supplies from April.

Oil prices slithered lower on an exodus by the speculative hedge funds which had propelled crude oil to nine year highs as producers held back over five million barrels per day of supply.

The stage could be set for further price falls now speculators are convinced the Organization of the Petroleum Exporting Countries will relax the year-long curbs to cool off heated oil markets, dealers said.

OPEC President and Qatari Oil Minister Abdullah bin Hamad al-Attiyah has defined a fair price range as $23-$24 a barrel, while OPEC power Saudi Arabia, the world's biggest producer and exporter, has previously described a price of $20-$25 as ideal.

But Petroleos de Venezuela (PDVSA) -- state oil company in OPEC's third biggest producer -- expects prices for U.S. crude to drop to between $16 and $21 per barrel in the final quarter of this year.

Prices have already retreated by five dollars since Brent's post-Gulf War peak at $31.95 early last week as Saudi Arabia signaled it favored a large increase in output from April 1.

Saudi Arabia's supply hints were music to the ears of the United States -- the world's biggest oil consumer -- which has been leaning on OPEC to boost production.

President Clinton said on Thursday the U.S. government hoped to announce steps in the next few days to help Americans cope with the high price of oil and gasoline.

Further fuelling bearish sentiment, OPEC sources indicated that leading produces favor any extra oil coming in addition to current output leakage above the group's self-imposed ceiling.

According to a monthly OPEC report released Friday, the 10 cartel members signed up for output curbs produced 24.138 million barrels per day (bpd) in February, or 1.162 million bpd above the official quota set last March.

As negotiations intensify ahead of March 27's OPEC meeting Venezuelan Energy and Mines Minister Ali Rodriguez will tour five OPEC member countries in coming days to work for a consensus on the next move.

Rodriguez will visit Iran, Algeria and Libya -- the three OPEC members that have publicly opposed any big OPEC output hike -- as well as Kuwait and Iraq, the latter outside the current production agreement.

-- cpr (buytexas@swbell.net), March 17, 2000

Answers

I guess it depends then on what OPEC is willing or able to pruduce. Predicting lower oil prices may not be a safe bet.

-- (lurking@t.work), March 17, 2000.

Demand isn't slackening, so OPEC would have to step up production if prices were to fall. There are two ways that could happen. The Saudis could lead OPEC to accept higher production quotas. Or the non-Saudi OPEC members could cheat on their current quotas trying to make a killing while the market is hot. Either way is somewhat plausible, but not guaranteed.

-- Brian McLaughlin (brianm@ims.com), March 17, 2000.

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