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Oil prices pushed further above $US30 on Monday ahead of this week's Opec producer cartel meeting, which is expected to tighten crude supplies as fuel demand dips to the lowest point in the year.

US light crude in New York rose 26 cents to $US30.81 a barrel, the highest closing price in nearly three weeks.

Trade in Brent crude on London's International Petroleum Exchange was closed for the Easter holiday.

The Organization of the Petroleum Exporting Countries (Opec) will hold an emergency meeting in Vienna on Thursday - called after oil dropped about 30% in a month when Middle East oil flows escaped severe disruption from the war in Iraq.

"We expect oil prices will remain well-supported given recent statements from member countries indicating a desire to curtail physical supply," said Matthew Warburton of UBS Warburg investment bank in a research note.

Prices rebounded last week as Iran called on Opec, which controls over half of oil exports worldwide, to cut official production quotas, warning that a failure to rein in supply could trigger a price collapse.

Other Opec members have said that tighter compliance with official output limits would probably be enough to avoid a supply glut.

Opec pumped more than 1.5 million barrels per day (bpd) over its self-imposed 24.5 million bpd production ceiling in March, as it raised output to counter the loss of Iraqi exports and earlier disruption from a strike in Venezuela.

<a href=reuters.com>Reuters Mon April 21, 2003 10:15 AM ET

NEW YORK (Reuters) - Oil prices held above $30 on Monday ahead of this week's OPEC producer cartel meeting which is expected to tighten crude supplies as fuel demand dips to the lowest point in the year.

U.S. light crude CLc1 in New York stood 18 cents lower at $30.37 a barrel. Trade in Brent crude on London's International Petroleum Exchange was closed for the Easter holiday.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Thursday for an emergency meeting called after oil dropped about 30 percent in a month as Middle East oil flows escaped severe disruption from war in Iraq.

Oil prices rebounded late last week as Iran called on OPEC, which controls over half world oil exports, to cut official production quotas warning that failure to rein in supply could trigger a price collapse.

Other OPEC members have said tighter compliance to official output limits would probably be enough to avoid a supply glut.

OPEC pumped more than 1.5 million barrels per day (bpd) over its self-imposed 24.5 million bpd production ceiling in March as it raised output to counter the loss of Iraqi supply and earlier disruption from a strike in Venezuela.

Iran's Oil Minister Bijan Zanganeh on Monday said OPEC's quota busters should be the first to restrain output. "All those that have increased their output in an unusual way, they should also be the first to decrease their production," the Aftab-e Yazd newspaper quoted Zanganeh as saying.

ECONOMIC WEAKNESS

Oil prices have risen back above $30 -- the level that some economists warn can hurt economic growth -- on the month-long absence of Iraq's crude exports, halted since the start of the U.S.-led offensive.

U.S. inventories of crude and refined products are still below normal levels heading toward the U.S. summer vacation driving season when gasoline demand peaks.

"With market attention firmly focused on the forthcoming OPEC meeting, we expect oil prices will remain well supported given recent statements from member countries indicating a desire to curtail physical supply," said Matthew Warburton of UBS Warburg bank in a research note.

The question of Iraq's representation at the OPEC meeting was muddled on Monday, with Jawdat al-Obeidi, a former Iraqi general who says he is deputy governor of post-war Baghdad saying he would lead a delegation to the OPEC meeting.

The U.S. government said it does not recognize Mohammed Mohsen al-Zubaidi, who has declared himself governor of Baghdad, and therefore his deputy cannot represent Iraq at OPEC.

In a sign Iraq's oil sector is beginning a post-war recovery, Iraqi oil officials said on Monday the country's key oil refinery Daura in Baghdad had started operation at half capacity of 40,000 barrels per day.

By NEELA BANERJEE <a href=www.abs-cbnnews.com>abs-cbnnews.com-The New York Times

When the Organization of the Petroleum Exporting Countries (OPEC) met five weeks ago to set its spring export levels, it faced an uncertain world, one clouded by the prospect of a war in Iraq. When it meets again on Thursday, it will face more uncertainty now that the main fighting is over.

Before the war, most of OPEC’s members pumped oil at maximum levels to make up for an expected curb in Iraqi exports -- something that in fact occurred -- and prices moved higher. They had climbed through the winter, not only in expectation of war but also because of political strife in Venezuela and ethnic clashes in Nigeria, and then swung back and forth on news from the battlefronts in Iraq.

On Thursday, the last trading day before the Easter holidays, the price of crude oil rose $1.37, or 4.7 percent, to $30.55 a barrel on the New York Mercantile Exchange.

Still, OPEC worries that if it does not scale back its extra production soon, oil prices will fall below $20 a barrel, beneath the group’s ideal price range of $22 to $28.

Despite the currently robust prices, OPEC is concerned in large part because of a belief among oil traders, shaped by optimistic forecasts by the US government, that Iraqi exports could resume in weeks. Combined with the additional OPEC production, this reasoning goes, that could create a glut.

Yet most oil experts agree that it is too early to tell when Iraqi exports might return and at what quantities, given the tangle of technical, financial and diplomatic issues that must be sorted out by the American authorities now running Iraq. It is not even clear who might represent Iraq, an OPEC member, at this week’s meeting in Vienna or whether it will even remain in OPEC, a seemingly distant issue that already concerns other members.

Add to the mix the weak global economic recovery and the economic effects of the respiratory illness sars, industry experts say, and it becomes difficult for OPEC to make a sound decision about how much oil to pump.

“It’s very hard now to look at the supply-demand balance,” said Mehdi Varzi, president of Varzi Energy, a consulting firm in London. “The picture is so mixed up with what’s happening in the Middle East still.”

Representatives from the Army Corps of Engineers responsible for repairing oil fields in Iraq have said that some oil exports could start flowing again in weeks. Kurdish leaders who entered the northern oil region near Kirkuk with American soldiers have predicted the same.

But it remains unclear who has the right to export Iraqi oil. Under UN sanctions, Iraq can export its oil only through the oil-for-food program, and the Bush administration is pressing the Security Council to change that agreement so the United States can sell Iraqi oil. When this might happen is unclear.

Also, some Kirkuk fields have been so efficiently ransacked that managers there say it may be several months before they can produce enough oil for export. And it remains unclear who will pay to replace what was looted from Kirkuk to make that possible.

Some OPEC leaders, like Algeria’s oil minister, Chakib Khelil, say the group will most likely rein in extra production to the official quota levels of 24.5 million barrels a day. It is now producing nearly 26 million barrels, according to recent estimates by the Middle East Economic Survey. And Venezuela and Nigeria have resumed degrees of production.

Such a cutback might be enough to calm a market in which many oil traders and buyers think demand will be slack because of the sluggish world economy. In addition, the sars outbreak has already slowed economic growth in Asia and led to a drop in demand for jet fuel by several hundred thousand barrels a day because of a decline in tourism, said Lawrence Goldstein, president of the Petroleum Industry Research Foundation in New York.

Goldstein warns that there could be perils to a decision by OPEC to reduce output below 24.5 million barrels a day. Inventories of crude oil and gasoline were very low coming into the spring, and they are being replenished rapidly now by the increased OPEC output. But if that process stops, oil and gasoline prices may again rise as the United States, the largest oil consumer by far, enters the summer driving season.

Who will speak for Iraq on Thursday, and try to answer the unanswered questions, remains a mystery. There is no Iraqi government and the United States has yet to announce the structure of an interim oil ministry. Already, some OPEC members and many people in the Middle East worry that under American influence, Iraq could soon leave OPEC to pump a lot of oil on its own.

But Goldstein contends that Iraq can do that and stay in OPEC. While its oil output was determined by UN sanctions, the rest of OPEC took its market share, produced oil in its stead and pocketed the extra revenue.

Now, Goldstein and others say, Iraq might tell OPEC that it will pump as much as it can to make up for those lost years of revenue. Before the war, it produced about 2.8 million barrels a day and exported, legally and otherwise, about two million barrels of that.

“Iraq will produce what it’s capable of producing,” he said, “whether it stays in OPEC or not.”

Please send your comments or feedback to newsfeedback@abs-cbn.com

<a href=reuters.com>Reuters Mon April 21, 2003 10:15 AM ET

NEW YORK (Reuters) - Oil prices held above $30 on Monday ahead of this week's OPEC producer cartel meeting which is expected to tighten crude supplies as fuel demand dips to the lowest point in the year.

U.S. light crude CLc1 in New York stood 18 cents lower at $30.37 a barrel. Trade in Brent crude on London's International Petroleum Exchange was closed for the Easter holiday.

The Organization of the Petroleum Exporting Countries will meet in Vienna on Thursday for an emergency meeting called after oil dropped about 30 percent in a month as Middle East oil flows escaped severe disruption from war in Iraq.

Oil prices rebounded late last week as Iran called on OPEC, which controls over half world oil exports, to cut official production quotas warning that failure to rein in supply could trigger a price collapse.

Other OPEC members have said tighter compliance to official output limits would probably be enough to avoid a supply glut.

OPEC pumped more than 1.5 million barrels per day (bpd) over its self-imposed 24.5 million bpd production ceiling in March as it raised output to counter the loss of Iraqi supply and earlier disruption from a strike in Venezuela.

Iran's Oil Minister Bijan Zanganeh on Monday said OPEC's quota busters should be the first to restrain output. "All those that have increased their output in an unusual way, they should also be the first to decrease their production," the Aftab-e Yazd newspaper quoted Zanganeh as saying.

ECONOMIC WEAKNESS

Oil prices have risen back above $30 -- the level that some economists warn can hurt economic growth -- on the month-long absence of Iraq's crude exports, halted since the start of the U.S.-led offensive.

U.S. inventories of crude and refined products are still below normal levels heading toward the U.S. summer vacation driving season when gasoline demand peaks.

"With market attention firmly focused on the forthcoming OPEC meeting, we expect oil prices will remain well supported given recent statements from member countries indicating a desire to curtail physical supply," said Matthew Warburton of UBS Warburg bank in a research note.

The question of Iraq's representation at the OPEC meeting was muddled on Monday, with Jawdat al-Obeidi, a former Iraqi general who says he is deputy governor of post-war Baghdad saying he would lead a delegation to the OPEC meeting.

The U.S. government said it does not recognize Mohammed Mohsen al-Zubaidi, who has declared himself governor of Baghdad, and therefore his deputy cannot represent Iraq at OPEC.

In a sign Iraq's oil sector is beginning a post-war recovery, Iraqi oil officials said on Monday the country's key oil refinery Daura in Baghdad had started operation at half capacity of 40,000 barrels per day.

<a href=quote.bloomberg.com>Bloomberg By Alex Lawler

Vienna, April 21 -- OPEC, supplier of a third of the world's oil, is planning to cut production from its highest level in 1 1/2 years to prevent a price slump as demand slows and Iraqi sales near a return to the market.

Saudi Arabia led OPEC's output higher this year to avert shortages caused by outages in Venezuela and Nigeria and the war- related halt to Iraqi exports. Production is some 2 million barrels a day more than demand, OPEC ministers said last week.

Crude oil in New York has slid 24 percent from a 12-year high of $39.99 a barrel in February while the coalition deposed Saddam Hussein in Iraq and seized the country's oil fields. Faced with a seasonal drop in use, the Organization of Petroleum Exporting Countries meets Thursday to discuss how to prevent a glut.

OPEC is pumping an awful lot of oil,'' said Steve Thornber, who manages about 400 million pounds ($628 million) at Threadneedle Asset Management in London, including BP Plc shares. If OPEC doesn't take action or it's seen as not aggressive enough, you will see a sharp drop in the oil price.''

The group sets quotas to keep prices between $22 and $28 a barrel, and some members may be reluctant to lower production because of a need to raise government revenue. It had planned to next meet on June 11 in Doha, Qatar, though called this week's gathering after prices slid.

OPEC in March pumped 1.57 million barrels a day more than the target of 24.5 million, almost enough to supply Spain, according to Bloomberg estimates. Of the total, Saudi Arabia pumped 9.2 million barrels a day.

Some OPEC members will feel Saudi Arabia should take a greater proportion of any cut,'' said Paul Spedding, an oil analyst at Dresdner Kleinwort Wasserstein. The debate is whether Saudi Arabia will agree with that.''

The return of Iraqi supplies will also be a challenge for OPEC. Production may resume from Iraq's northern fields as early as May, the U.S. military has said. Resuming exports depends on deciding who will sell the oil.

Too Much Oil?

Indonesia will ask OPEC to lower daily oil production by as much as 2 million barrels, the country's oil minister, Purnomo Yusgiantoro, has said. Venezuela, Qatar, Algeria and Iran have said markets have too much oil, signaling support for a cut.

Oil consumers, including the International Energy Agency, representing 26 industrialized countries, urge caution, saying supplies are needed to replenish inventories. U.S. crude stocks are 14 percent lower than a year ago, and a reduction in output would threaten to bring higher fuel bills at a time of slowing economic growth.

Algeria, OPEC's third-smallest producer, has called on OPEC members to comply with their targets. In comments that boosted world prices on Thursday, Iran, the second-largest OPEC producer, said any reduction should come from the quotas.

Any decision to cut the quota now would be premature,'' said Julian Lee, an analyst at Centre for Global Energy Studies, a consulting company founded by former Saudi oil minister Sheikh Zaki Yamani. The world needs to rebuild stocks.''

Challenge

OPEC's oil price index was last at $26.25 a barrel, close to the middle of the group's range of $22 and $28 a barrel. The marker has been above the $22 floor since March 2002.

Saudi Arabia has yet to signal its policy. State-owned Saudi Aramco in May will fulfill all oil contracts to customers in Europe, Japan and South Korea, traders said after seeing notices from the oil producer.

We should expect to see a move for stricter quota adherence,'' said Brian Gibbons, an analyst at CreditSights Inc., an independent New York-based research company. The bulk of that will have to come from Saudi Arabia. It will be difficult for the small to mid-sized OPEC members to trim production.''

Brent crude in London will fall below $20 a barrel in the third quarter from about $25 now if OPEC holds supply near present levels, the CGES said in a report. Should OPEC adhere to the quota, prices will rise to $27.90 next quarter, the group forecast.

Iraq Invited

Iraq will be able to start pumping oil from its northern fields in weeks because of limited damage to installations, the U.S. military has said. Production in the south, where the harm is greater, can't resume for three months.

As a point of protocol, OPEC headquarters invited Hussein's oil minister to attend Thursday's meeting. The current whereabouts of Amer Rasheed, who appears as the six of spades in the deck of cards issued to U.S. forces in Iraq detailing the most-wanted members of Hussein's regime, are unknown.

One of five nations that founded OPEC in 1960 in Baghdad, Iraq has no quota because of United Nations sanctions imposed for the nation's 1990 invasion of Kuwait. Iraq's Vienna embassy couldn't be reached to confirm if it will send a representative to the meeting.

Iraq will send a delegation led by Major General Jawdat al- Obeidi to the group's meeting Thursday, Reuters reported yesterday, citing an Iraqi opposition official.

Last Updated: April 20, 2003 19:01 EDT