Saudis push for Opec cut

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Saudis push for Opec cut

Saudis push for Opec cut

By David Buchan and Ruth Sullivan in London Published: January 2 2001 20:40GMT | Last Updated: January 2 2001 22:57GMT

Saudi Arabia, Opec's leading producer, on Tuesday called for a big cut in the cartel's oil production this month, but the move produced only a brief rally in the oil price.

The call for a cut of 1.5m barrels a day appeared to convince the oil markets that Opec will reduce production quotas when it meets in Vienna on January 17, but that this would not necessarily halt a slide in the price from last October's peak of $35.

After a weekend meeting of the Gulf Cooperation Council, which also includes Opec members Kuwait, the United Arab Emirates and Qatar, a Saudi official told the Reuters news agency that GCC leaders had told their ministers "to do whatever is needed to achieve the targeted price of $25 for the Opec basket". To achieve this, a cut of 1.5m barrels per day would be needed, the official said.

The size of the proposed cut took some traders by surprise.

"It is a dramatic proposal, as we had been expecting calls for cuts of 1m barrels a day," said Peter Gignoux, a trader at Salomon Smith Barney.

However, the Saudi call failed to shake market belief that world oil supplies are adequate or even excessive.

Brent February futures on London's International Petroleum Exchange rose 98 cents to $24.90 in mid-afternoon trading before falling back to $24.46. On the New York Mercantile Exchange oil futures jumped 54 cents to $27.34 in morning trading before falling back to $26.87 at midday.

Other members of the 11-nation Opec cartel, including Iran, Venezuela and Libya, have already stressed the need for production cuts to pre-empt the seasonal decline in oil consumption next spring, making agreement on cuts this month highly likely. The US has increased pressure on Saudi Arabia to maintain oil output, but Washington's leverage will be weakened by the imminent change of administration.

The Saudi official's reference to a target of $25 for the Opec basket implies a higher price for the Brent benchmark crude. The Opec basket, composed of the crude oils of the cartel's producers, traditionally sells at a quality discount to Brent. It traded all last week at under $22 per barrel.

A cut of 1.5m barrels a day would reduce production for the 10 Opec members with quotas by around 5 per cent to just over 25m barrels a day. Iraq is not covered by Opec quotas, because it is restricted by United Nations sanctions.

http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3729H2IHC&live=true&tagid=ZZZCWHK1B0C&subheading=energy%20%26%20utilities

-- Martin Thompson (mthom1927@aol.com), January 03, 2001

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Fair use for educational/research purposes only

Oil&Gas Journal Online Story (Jan 03, 2001)

Top Stories Khelil: OPEC output cut could be triggered before Jan. 17

Algeria's Energy and Mines Minister, Chakib Khelil, Wednesday urged the 11 member states of the Organization of Petroleum Exporting Countries not to wait until the next ministerial meeting Jan. 17 before cutting production to prop up falling oil prices. According to a report from the OPEC's news agency, Khelil said OPEC's price band mechanism—designed to trigger adjustments to output when the oil price moves outside its desired $22-28/bbl range for more than 20 days (OGJ Online, Apr. 10, 2000)—should determine when a cut in output is made. Khelil said a production cut could be triggered if prices remained below the set level for 10 trading days in a row. If this should happen before the upcoming meeting in Vienna, said Khelil, the meeting could provide an occasion to "analyze the situation and decide whether any further cuts were necessary." Meanwhile, Indonesian Energy and Mineral Resource Minister Purnomo Yusgiantoro said OPEC ministers should cut overall output up to 1.5 billion b/d at the next ministerial meeting. Other ministers also have said OPEC should cut production to remove "excess" crude from markets and buttress slumping prices. "Our position is clear in that we are going to propose at the meeting an oil production cut ranging between 1-1.5 million b/d," Yusgiantoro said at a press conference in Jakarta. OPEC increased output four times last year to offset rising oil prices. The price of crude has fallen $10/bbl in recent weeks.

http://ogj.pennnet.com/Content/cd_anchor_printscreen/1,1242,OGJ_7_NEWS _DISPLAY_88712_2_7,00.html

-- Martin Thompson (mthom1927@aol.com), January 03, 2001.


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OPEC Said To Cut Oil Production

Saturday, January 06, 2001

KUWAIT (AP) - The members of the Organization of Petroleum Exporting Countries have agreed to cut production by 1.5 to 2 million barrels a day to boost prices, Kuwait's oil minister said Saturday. The state-run Kuwait News Agency quoted Sheik Saud Al Sabah as saying Ali Rodriguez, the organization's president, informed him of the consensus among OPEC's members. He did not provide further details. The 11-member cartel increased production four times over the past year to bring soaring prices down. Oil prices have been hovering around $20 a barrel, down from $30 for OPEC's basket of crudes in September. In Iraq, Oil Minister Amer Mohammed Rashid said the reduction would ``bring stability back to the market.'' He called for stronger unity among OPEC members and said they should be independent from outside pressures if they want to stabilize the oil market. OPEC countries produce 26.7 million barrels a day, or 40 percent of the world's oil. OPEC's oil ministers plan to meet in Vienna on Jan. 17.

http://news.lycos.com/headlines/World/article.asp? docid=APV0460&date=20010106

-- Martin Thompson (mthom1927@aol.com), January 06, 2001.


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