June 9, 2003, 4:14PM Reuters News Service

NEW YORK - Oil prices hit fresh 12-week highs today as members of the Organization of the Petroleum Exporting Countries cartel gathered for a Wednesday meeting against a backdrop of tight global supply.

U.S. crude oil in New rose 31 cents to $31.59 a barrel, hitting the highest price in 11 weeks after rising 20 percent in barely a month. Brent crude in London rose 7 cents to $27.85 a barrel.

OPEC ministers meeting in the small Middle East emirate of Qatar will debate whether they need to cut production to accommodate the expected resumption of Iraq's oil exports this month.

With prices nearly 30 percent higher than the same time last year and Iraq's exports expected to stay below pre-war limits for up to a year, some OPEC ministers have said there seems to be no need for the group to rein in supply.

OPEC, which controls around half the world's crude exports, aims to keep prices in a $22-28 a barrel range for its basket of crude oils. The basket was last valued at $26.77.

"There is no urgent need for the organization to modify its output," said Frederic Lasserre of SG Securities in a report.

"Iraq is still not in a position to harm the balance of supply and demand. Inventories are rising in line with the season but in absolute terms remain very low," Lasserre added.

After falling heavily from 12-year highs near $40 when Middle East oil facilities escaped feared damage from the U.S.-led invasion of Iraq, oil prices have now risen back to the levels that can further undermine already weak economic growth.

OPEC will use this week's meeting to press independent exporters such as Russia, Norway and Mexico to back any supply cuts needed later this year, OPEC President Abdullah al-Attiyah of Qatar said.

Iraq will this month sell its first crude since the U.S.-led invasion in mid-March, tendering 10 million barrels of stored crude oil this month, allowing it to deliver an average of about 750,000 bpd during the second half of June.

Sabotage at oil facilities since the war will keep exports down to one million bpd in July, Iraq's de facto oil minister Thamir Ghadhban said on Monday. Before the war, Iraq was producing about 2.5 million bpd and exporting two million bpd.

U.S. fuel inventories have failed to rebuild after supply disruptions from a strike in Venezuela and ethnic strife in Nigeria drew down supplies earlier this year.

U.S. crude stocks remain in an 11 percent deficit versus last year, while gasoline is down five percent. The next U.S. government supply data will be released on Wednesday.

U.S. average retail gasoline prices fell over the last three weeks, but did so at a slower rate than previously reported as crude oil prices began to rise, according to the Lundberg survey of about 8,000 gas stations.

"In the past three weeks, gasoline price declines are much slower and appear to be ceasing altogether," said Trilby Lundberg, editor of the survey.

The national average for self-serve regular unleaded gasoline fell 1.8 cents to $1.51 a gallon -- more than 10 cents above last year in the period between May 16 and June 6.

FoxNews Monday, June 09, 2003

NEW YORK  — Oil prices hit fresh 12-week highs Monday as members of the Organization of the Petroleum Exporting Countries (search) cartel gathered for a Wednesday meeting against a backdrop of tight global supply.

U.S. crude oil in New York rose 31 cents to $31.59 a barrel, hitting the highest price in 11 weeks after rising 20 percent in barely a month. Brent crude (search) in London rose 7 cents to $27.85 a barrel.

OPEC ministers meeting in the small Middle East emirate of Qatar (search) will debate whether they need to cut production to accommodate the expected resumption of Iraq's oil exports this month.

With prices nearly 30 percent higher than the same time last year and Iraq's exports expected to stay below pre-war limits for up to a year, some OPEC ministers have said there seems to be no need for the group to rein in supply.

OPEC, which controls around half the world's crude exports, aims to keep prices in a $22-28 a barrel range for its basket of crude oils. The basket was last valued at $26.77.

"There is no urgent need for the organization to modify its output," said Frederic Lasserre of SG Securities in a report.

"Iraq is still not in a position to harm the balance of supply and demand. Inventories are rising in line with the season but in absolute terms remain very low," Lasserre added.

After falling heavily from 12-year highs near $40 when Middle East oil facilities escaped feared damage from the U.S.-led invasion of Iraq, oil prices have now risen back to the levels that can further undermine already weak economic growth.

OPEC will use this week's meeting to press independent exporters such as Russia, Norway and Mexico to back any supply cuts needed later this year, OPEC President Abdullah al-Attiyah of Qatar said.

Iraq will this month sell its first crude since the U.S.-led invasion in mid-March, tendering 10 million barrels of stored crude oil this month, allowing it to deliver an average of about 750,000 bpd during the second half of June.

Sabotage at oil facilities since the war will keep exports down to one million bpd in July, Iraq's de facto oil minister Thamir Ghadhban said on Monday. Before the war, Iraq was producing about 2.5 million bpd and exporting two million bpd.

U.S. fuel inventories have failed to rebuild after supply disruptions from a strike in Venezuela and ethnic strife in Nigeria drew down supplies earlier this year.

U.S. crude stocks remain in an 11 percent deficit versus last year, while gasoline is down five percent. The next U.S. government supply data will be released on Wednesday.

U.S. average retail gasoline prices fell over the last three weeks, but did so at a slower rate than previously reported as crude oil prices began to rise, according to the Lundberg survey of about 8,000 gas stations.

"In the past three weeks, gasoline price declines are much slower and appear to be ceasing altogether," said Trilby Lundberg (search), editor of the survey.

The national average for self-serve regular unleaded gasoline fell 1.8 cents to $1.51 a gallon -- more than 10 cents above last year in the period between May 16 and June 6.

Reuters, 06.09.03, 9:02 AM ET  By Dominique Magada LONDON, June 9 (Reuters) - Oil prices dropped on Monday but remained around their highest level since mid-March, ahead of a meeting on Wednesday of the Organisation of the Petroleum Exporting Countries. Brent crude fell 36 cents to $27.42 a barrel while U.S. light crude was down 33 cents at $30.95 a barrel. OPEC ministers will meet in Doha, Qatar, to decide whether to keep their oil production quotas at the current level of 25.4 million barrels per day (bpd) or cut them to prevent a potential price slide from the return of Iraqi oil to the market. With oil prices at the top end of the group's $22-$28 preferred price range, some ministers have said there appears to be no need for an immediate cut from the current limit. "We expect a status quo from the OPEC meeting," said Peter Gignoux, head of the London Energy Desk at Citigroup. The cartel is said to be preparing the ground for possible restraints later this year by putting early pressure on its rivals to prevent them winning market share. Iraq announced last week it would resume oil exports in June, tendering this week 10 million barrels held in storage. However, a full recovery of its pre-war exports -- some four percent of globally traded oil -- appears distant due to sabotage to oil facilities. "We're looking first at the 10 million barrels that have to be sold, it's real oil coming onto the market," said Citigroup's Gignoux. "We'll look at production levels in the North and the South once that oil is sold." Monday's slight price decline was attributed to crude oil selling by funds, although such action was limited to small volumes, traders said. "Ahead of Wednesday's OPEC meeting prices are likely to remain steady at recent highs," said Barclays Capital Research in London in their daily report. OPEC this week is also set to press independent exporters to back its next supply cut. OPEC President Abdullah al-Attiyah said on Sunday major non-aligned producers Mexico, Russia and Norway would be called on to help the group defend its $25 a barrel price target. OPEC member Venezuela was confident non-OPEC Mexico would cooperate with any decision the cartel takes on oil supply and expressed confidence the group could support prices, the country's oil minister, Rafael Ramirez, said on Monday. Ramirez also said on Monday he saw the fundamentals in the international oil markets in balance, and added that OPEC could call for an extraordinary gathering before the next one scheduled in September.

Reuters, 06.09.03, 8:55 AM ET By Tom Ashby DOHA, June 9 (Reuters) - OPEC gathered in the tiny Gulf state of Qatar on Monday amid signs the cartel will stay its hand on cutting output in an effort to refill depleted oil inventories in the West. Stocks have stayed low after two months of zero exports from Iraq, the world's seventh largest exporter before the U.S.-led invasion, despite big output hikes from other members of the 11-member cartel. "When there was perhaps some overproduction, the low stock levels captured some of the oil. Now we have to see how low those stocks are," OPEC Secretary-General Alvaro Silva told reporters here ahead of Wednesday's meeting. With prices at the top end of OPEC's $22-$28 per barrel target range, Indonesia and Venezuela have said there is no need for any cut now from its 25.4 million barrel a day ceiling. Silva said OPEC's previous meeting in April, which raised quotas to cover for Iraq's export halt, had kept prices steady, with OPEC's latest basket price at $26.77 per barrel. "We are going to see what measures should be taken; if we should keep things as they are, if we should make an adjustment, a cut. I can't yet say which," he told Reuters. RIVAL EXPORTERS The Middle East-dominated cartel, which controls half of world exports, will most likely use the Doha meeting to prepare the ground for a possible cut later this year when Iraqi output is expected to rise. "With prices where they are I don't think OPEC will do anything," said Nauman Barakat, a broker at Fimat International Banque. "They will probably call another meeting once Iraq comes back and rope in non-OPEC to do its bit," he added. OPEC has invited rival exporters including Mexico and Russia to Qatar, hoping to maintain a fragile partnership that has kept OPEC's basket near $25 per barrel for four years -- a boom price compared to the previous decade. Recovering from the war, Baghdad is preparing to resume international sales in about a week's time. Shipments are expected to rise sharply over the next few months, but still well below pre-war levels. In April, OPEC ministers said they were ready to cut up to two million barrels per day (bpd) to make room for Baghdad. However, prices have remained higher than some expected, while stocks in consuming countries such as the United States have failed to recover fully from historically low levels. Data from the OPEC secretariat now shows that the world market can absorb some 1.3 million bpd above forecast demand during the third quarter to replenish stocks, an OPEC source said, asking not to be named. "That means there is more than enough room for Iraq at current quota levels," he told Reuters, predicting Iraqi supply at 1.5 million bpd in the third quarter. OPEC powers Saudi Arabia and Venezuela met with Mexico in Madrid on Friday to discuss the return of Iraq. Venezuela's Oil Minister Rafael Ramirez visits Norway on Monday. Venezuela said there was adequate oil supply to meet demand, and non-OPEC countries including Mexico, Russia and Norway were willing to coordinate output policy.

Times Online June 09, 2003 By Carl Mortished, International Business Editor

THE Opec oil producer cartel is unlikely to agree a production cut at its meeting in Doha this week despite rising anxiety over the imminent resumption of Iraqi oil exports.

Qatar’s Oil Minister said yesterday that there was no immediate plan to reduce the flow of crude. “We won’t just cut for the sake of cutting,” he said. However, he indicated that potential Iraqi output would be on the agenda at Wednesday’s Opec meeting.

The Opec leaders are taking comfort from a buoyant oil price which rose above $31 in New York on Friday. The oil ministers of Saudi Arabia and Venezuela met with their non-Opec Mexican counterpart in Madrid last week in the hope of garnering support for cutbacks when Iraq returns to the market. Rafael Ramirez, the Venezuelan oil minister, said: “We are also in contact with Russia and Norway and I think we will get good results.”

The Opec leaders’ plans are being confounded by the continuing high price of oil despite fundamental weaknesses in the market. Leo Drollas, of the Centre for Global Energy Studies, said: “It is a tale of two halves. The western hemisphere is tight while the east is getting weaker.”

The US is still short of petrol and crude stocks have still not fully recovered from the shortages caused by the Venezuelan oil strike last winter. In Asia the picture is quite different, with refiners in Singapore cutting their output in response to weak demand.

Iraq hopes to begin normal crude exports by the end of the month but a substantial contribution to global production is probably months away.