April 9, 2003, 3:53PM Reuters News Service

NEW YORK -- Oil prices gained today as Saddam Hussein's rule over Iraq collapsed and OPEC considered cutting back extra supplies, pumped mainly by Saudi Arabia to head off a war spike in energy costs.

U.S. light crude oil on the New York Mercantile Exchange jumped 85 cents, or 3 percent, to $28.85 a barrel. London Brent blend was up 65 cents at $25.25 a barrel.

Trade was slow as dealers watched events unfold in Baghdad.

"Since the invasion of Kuwait in 1990, Iraq has been a perennial feature of the world oil market, so it wasn't surprising people sat back today just to watch," said Peter Gignoux, head of the London energy desk at Citigroup.

Amid wild scenes, jubilant Iraqis welcomed advancing U.S. forces in the Iraqi capital and rampaging looters attacked symbols of Saddam's power. Thousands of U.S. troops moved into the center of the Iraqi capital, meeting little resistance.

There was no word on the fate of Saddam or his sons, targeted on Tuesday by U.S. planes that bombed a residential area in Baghdad thought to be housing the Iraqi leader.

U.S. forces said there were still battles to fight in northern Iraq and in Saddam's hometown of Tikrit, north of Baghdad.

Dealers said expectations were that an OPEC emergency meeting later this month will rein in galloping production to avert a potential price collapse in the second quarter, when demand tails off after winter.

Oil prices have fallen heavily from prewar peaks but prices are still near the middle of OPEC's $22-$28 target range for an index of cartel crudes.

OPEC at the April 24 gathering is expected at least to erase excess supplies of some 2 million barrels a day now being pumped above formal output limits of 24.5 million bpd.

It may also consider reducing those quota limits.

Two oil ministers -- those from the UAE and Algeria -- say a renewed commitment to existing quotas would probably be sufficient to balance supply and demand.

"It is possible that just by abiding by quotas we could reestablish a good balance in the market because we have to be concerned about it beyond this quarter," said Algerian Oil Minister Chakib Khelil.

"We have to be concerned about summer when demand for gasoline increases so we can't just make a decision now and see prices taking off in the summer," he told reporters in Paris.

Leading OPEC producer Saudi Arabia pushed output 1.5 million barrels a day above its official quota to help cushion the impact of the loss of Baghdad's 1.7 million bpd of exports during the U.S. invasion of Iraq.

"I expect OPEC to announce a more prudent production policy to accommodate rising production from Venezuela and Nigeria and Iraq in the next three to four months," said energy analyst Gordon Kwan at HSBC in Hong Kong.

"They will probably tighten up compliance to production quotas because it will be difficult for them to cut until there is clear visibility to the market that Iraq will restore exports," said Kwan.

Extra OPEC oil has helped lift low U.S. crude inventories in recent weeks, but the latest data released today recorded a surprise fall. The U.S. government's Energy Information Administration said inventories fell 3.6 million barrels to 277 million last week.

The prospect of Iraqi crude staying out of the market for some time yet hardened when a U.N. official confirmed on Tuesday that exports were unlikely to resume in the near future.

The United Nations oversees the oil-for-food program that allows Iraq to sell crude in exchange for humanitarian aid under U.N. sanctions imposed after it invaded Kuwait.

Benon Sevan, undersecretary-general in charge of oil-for-food for Iraq, said oil under contract and not yet lifted or oil stored in the Turkish Mediterranean port of Ceyhan would stay there until a competent authority was available.

The U.S. military has said it will take about three months to resume exports from the big southern Iraqi Rumaila oilfields. The military has still to take control of Iraq's northern oilfields around Kirkuk.

Tuesday, April 8, 2003 8:50:0 p.m By NEELA BANERJEE <a href=www.abs-cbnnews.com>The New York Times

The president of the Organization of Petroleum Exporting Countries (OPEC) called Monday for a special meeting later this month to discuss the recent slide in oil prices, which have fallen almost 20 percent since just before the war with Iraq began.

Speaking to reporters in Paris after meeting with French government officials, the OPEC leader, Abdullah al-Attiyah, who is Qatar's oil minister, said: “My main worry is how to deal with the dramatic price drop. The market is full of oil. It’s facing a glut, not a shortage.” He suggested a meeting on April 24 at the group’s headquarters in Vienna, Austria.

Since the beginning of the year, the Organization of the Petroleum Exporting Countries has gradually increased output above its official quotas to provide extra oil for global markets in the wake of a national strike in Venezuela and in anticipation of war in Iraq.

Oil prices remained stubbornly high for most of the winter, despite OPEC’s efforts, until the recent decline, caused largely by the expectation that a swift victory by US-led forces would quickly revive Iraqi oil exports.

To halt the fall in crude oil prices on world markets, OPEC may decide to rein in production, holding it at its official quota levels, industry analysts said. “They’re worried about a price slide,” said Leonidas Drollas, chief economist with the Center for Global Energy Studies, a London research group. “They will tell each other: ‘We must go down to our quotas. The crisis is over, prices are at $23 a barrel and we must act.”’

Drollas was referring to the cost of Brent crude oil on the International Petroleum Exchange in London, which fell as low as $23.40 a barrel Monday. On the New York Mercantile Exchange, the price of crude oil for May delivery closed at $27.96, down 66 cents.

Industry analysts said that oil prices may remain somewhat volatile for some time, given the political instability in several major exporting countries.

“How stable is the Venezuelan recovery?” said Vera de Ladoucette, senior director for Middle East research at Cambridge Energy Research Associates, voicing the worries that still prick at the market. “When will Nigeria be back? And when will Iraq will be back? We know there is no damage to Iraqi oil installations, but it takes time to bring that all back on stream.”

As it has increased production over the last few months to compensate for these problems, OPEC has worried that it could be creating a glut, de Ladoucette noted. And indeed, nearly all OPEC members are producing at their capacities, pumping a total of about 3 million barrels a day more than their official quotas, Drollas said.

Any change in output would probably not take effect until June or even July, said Lawrence Goldstein, president of the Petroleum Industry Research Foundation, mainly because OPEC members already have contracts with buyers for next month’s oil sales.

“You’re not talking about a faucet they will turn on or off,” Goldstein said.

In the meantime, the extra OPEC production is replenishing stockpiles of crude oil in the United States that were badly depleted by the fall in exports from Venezuela and the cold winter. Oil prices had been much more volatile until extra OPEC exports began arriving in the United States a few weeks ago and were then tallied in Energy Department estimates of oil inventories around the country.

Goldstein said, “We think that the worst is over as far as crude oil supplies go.”

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By Hil Anderson <a href=www.upi.com>UPI Chief Energy Correspondent From the National Desk Published 4/7/2003 6:17 PM

LOS ANGELES, April 7 (UPI) -- The coalition's military progress in Iraq kept oil prices on the run Monday despite OPEC's plans to meet later this month to discuss possible cuts in crude production in an effort to shore up prices.

May crude on the New York Mercantile Exchange fell 66 cents on the day to $27.96 per barrel after hovering slightly above $28 during the morning hours while traders digested reports that OPEC ministers would meet April 24 to presumably talk about the post-war supply situation and the winding down of the "war premium" that had pushed NYMEX to nearly $40 per barrel in February.

London crude fell 10 cents to $24.85 per barrel.

Crude also appeared to be influenced by NYMEX gasoline futures, which dipped 2.78 cents to 84.25 cents per gallon.

The downturn in futures prices should deflate retail gasoline prices somewhat in the United States as the annual summer increase in demand looms. The national average price for a gallon of regular at the pump Monday was $1.637, according to AAA, compared to $1.643 the previous day and $1.683 a month ago.

OPEC officials had little comment Monday on the Vienna meeting's agenda; however, ranking energy officials in the cartel's member nations have recently spoken of a "glut" of crude rather than any shortages caused by the war.

"Things have been very fragile, which is why we've seen the prices where they've been," Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Los Angeles Times. "If there are no further disruptions of supply from other countries, then we'll see the supply-demand fundamentals improving week to week."

OPEC has increased its output this month to a combined 26.3 million barrels per day despite political and ethnic strife that cut production in Venezuela and Nigeria. Nigerian exports are expected to resume in the coming days while Venezuela has gradually returned to normal export levels.

In addition, U.S. and British officials are hoping that Iraq can begin exporting in the near future as well in order to help finance its post-war reconstruction.

Iraq's southern oil fields were seized largely intact by coalition forces early in the campaign and could begin producing this summer once repairs are completed.

The impact that Iraq's return to the market will have on short-term prices is still the subject of debate. Some analysts foresee the low oil inventories in the United States acting to support prices while others opine that the psychological impact that a flush market will have on traders will cause prices to fall further.

Reuters, 04.08.03, 7:05 AM ET(Recasts, PVS SINGAPORE) By Jonathan Leff

LONDON, April 8 (Reuters) - Oil prices moved sideways on Tuesday as expectations of a swift end to the U.S.-led war on Iraq and a possible output cut from the producers' cartel OPEC pulled the market in opposite directions, dealers said.

The 11-member oil exporters' group is set to hold an emergency meeting on April 24 to discuss output cuts after prices slumped 30 percent in the past month, threatening to dip below the group's $22-$28 preferred price range.

U.S. light crude recovered an overnight fall to trade up four cents at $28 a barrel, down from nearly $40 at the end of February, while London benchmark Brent blend traded six cents up at $24.64. On Monday Brent hit a four-month low of $23.40.

"The market is supported by this talk that OPEC might cut production. This is the first we've heard from them for some time and it gives prices an excuse to retrace losses," said an IPE Brent broker from the London exchange floor.

"The war is still a very bearish factor, but without OPEC I think the rug would be pulled out from under us."

OPEC, which controls 40 percent of global crude exports, has lifted production this year to cover supply losses from a two-month strike in Venezuela and to prevent any spike in prices if Iraqi crude exports were cut off by a U.S.-led war.

But prices have actually plunged by as much as a third since just before the war began 20 days ago, prompting cartel officials to start talking of a potential cut in production.

"Currently oil is in oversupply in the market. But we will see the development of the price," Indonesian Mines and Energy Minister Purnomo Yusgiantoro told reporters.

The lynchpin will be powerhouse Saudi Arabia, which had hiked output to a 21-year high in March to compensate for stoppages from Iraq, where U.N.-supervised exports of about 1.7 million bpd closed before the start of hostilities March 20.

A Gulf source familiar with Saudi thinking told Reuters on Tuesday OPEC was ready to keep prices near its target $25, but did not say whether it was considering a cut in the formal output ceiling, now at 24.5 million barrels per day, or remove excess output above that level, now running at two million bpd.

U.S. BATTLES FOR BAGHDAD

The war in Iraq remained a bearish factor for prices, as dealers looked forward to the return of Bagdad's supplies to world markets and the development of the country's massive reserves, second only to Saudi Arabia's.

A short-lived war may mean minimum damage to Iraq's oil infrastructure, allowing supplies to flow sooner.

U.S. tanks fought an intense battle with Iraqi soldiers in the heart of Baghdad on Tuesday and officials said U.S. aircraft had dropped four 900 kg (2,000 pound) bombs in a residential area, specifically tageting Saddam and his sons Uday and Qusay.

The British army said it had taken control of Basra, Iraq's second city, while U.S. forces increased their presence in Baghdad.

Oil prices have also come under selling pressure as recent data on the U.S. economy have raised concerns that it may be heading into recession, which would choke demand for petroleum.

<a href=www.canada.com>Reuters Thursday, April 03, 2003

OPEC exporters cut the cost of the Iraqi war to the West by releasing extra volumes of oil last month to prevent a spike in crude prices, according to a Reuters survey of cartel production.

The United States' main allies in the Gulf -- Saudi Arabia and Kuwait -- hiked output dramatically with Riyadh pumping at its highest rate in 21 years, the survey found.

Even U.S. foe Iran lifted supplies, after having publicly opposed any rise in exports on the grounds that it would signal a green light to Washington for an attack.

"The economic incentive to take advantage of high prices while they lasted proved to be stronger than political motives," said Geoff Pyne, consultant to Sempra Energy Trading.

The 11-member Organization of the Petroleum Exporting Countries pumped an extra 440,000 barrels per day (bpd) in March to reach 27.65 million bpd on average, the survey of industry consultants and officials showed.

Excluding Iraq, where exports were cut just ahead of the war, 10 cartel members with quotas pumped an extra 1.77 million barrels a day to 26.45 million bpd. That is 1.95 million bpd above their self-imposed limits of 24.5 million.

The extra barrels were sorely needed by Western importing countries, which had drawn down commercial stockpiles over the winter due to cold weather and shortages from a strike in Venezuela.

Benchmark Brent crude oil prices slumped 17 per cent in March, ending the month at $27.18 per barrel.

Saudi Arabia extended recent output gains to average 9.51 million bpd in March, its highest level since October 1981, but still short of its full capacity of 10.5 million bpd.

"Saudi Arabia had the chance to show that they are a reliable supplier to the United States.

"They did a good job," said George Beranek of Petroleum Finance Co. in Washington