DESPITE SQUEEZE, OPEC LIKELY TO KEEP LID ON OIL PRODUCTION

From Tribune News Services November 11, 2000 LONDON -- Despite tight supplies in world oil markets, OPEC is expected to forgo any increase in crude production when its members meet Sunday to assess market conditions.

As a result, consumers should not count on seeing lower prices for heating oil or gasoline any time soon, some analysts say.

On Friday, crude oil futures settled above $34 a barrel for the first time in four weeks at the New York Mercantile Exchange amid a late flurry of short-covering ahead of the OPEC meeting. The December contract rose 10 cents, to $34.02 a barrel.

OPEC's official line is that it will stick to the quotas it adopted last month, and analysts say the cartel probably won't adjust its output level before the end of the year.

In fact, when it does decide next to modify its output, the Organization of Petroleum Exporting Countries is more likely to cut back on crude production than to raise it.

Oil ministers from OPEC's 11 member nations are meeting this weekend in Vienna. It is their fourth policy meeting of the year--an unusually intense schedule.

OPEC is eager to appease the United States and other key importers that have demanded relief , yet it also fears pumping too much oil and causing prices to plunge.

The cartel decided to pump an additional 3.2 million barrels a day at its three previous meetings. It added 500,000 more at the beginning of this month after prices held above a key benchmark for 20 consecutive days.

OPEC President Ali Rodriguez, however, has ruled out further increases at Sunday's meeting. "There won't be a change in oil output policy," he said Friday in Vienna.

OPEC produces almost 40 percent of the world's crude, with an official output of 26.7 million barrel a day. It actually produces much more: 29.5 million barrels in October, according to the Paris-based International Energy Agency.

Heating oil futures, which jumped 6 percent Thursday to $1.016 a gallon on the New York Mercantile Exchange, eased to $1.008 Friday.

http://www.chicagotribune.com/business/printedition/article/0,2669,SAV-0011110069,FF.html

-- Martin Thompson (mthom1927@aol.com), November 11, 2000

Answers

I thought production was supposed to rise, automatically, after twenty days of oil being above $28 a barrel.

-- RogerT (rogerT@c-zone.net), November 12, 2000.