abc.net.au Mon, Jan 13 2003 7:56 AM AEDT

An emergency meeting of Organisation of the Petroleum Exporting Countries (OPEC) ministers in Vienna has announced an increase in oil production of 1.5 million barrels a day.

The decision is aimed at calming an anxious market.

A strike in Venezuela and the possibility of war in Iraq two issues OPEC oil ministers were trying to untangle in a two-day meeting in Vienna.

Ongoing industrial action in Venezuela is denying the oil market some two million barrels a day.

That production shortfall and the threat of war in Iraq have sent prices above $US33 a barrel for the first time in two years.

OPEC leaders say the decision to increase production is a temporary one, to shore up supplies and take some of the heat out of prices.

Oil analyst Raad Alkadiri says OPEC had no other choice but to increase production and take the heat out of prices.

"Looking at it financially, obviously OPEC stands to benefit from higher prices," Mr Alkadiri said.

"But I think OPEC is also is trying to show - and Saudi Arabia in particular is trying to show - that their policy of an adequate price for both suppliers and consumers is something that they adhere to.

"They know that high prices cause political problems, they know that higher prices in the long term also cause economic problems."

business-times.asia1.com.sg January 13, 2003

(LONDON) Oil prices fell back last week after the Organisation of Petroleum Exporting Countries (Opec) oil ministers signalled they were ready to pump more oil to ward off an oil price spike threatened by a strike in Venezuela and the spectre of a war in Iraq.

But prices later recouped much of the losses amidst worries that crude will remain in short supply even after the extra crude eventually hits the market.

GOLD: Gold prices rose to US$356.10 per ounce at the start of last week on the London Bullion Market, the highest fixing since March 1997. By Friday afternoon, an ounce of the precious metal was fixed at US$353 per ounce against US$344.5 the previous week.

'A couple of things are driving it, the most significant being I think the continued weakness of the US dollar - this has attracted further speculative buying, particularly on the New York Comex floor,' said UBS Warburg analyst John Reade.

SILVER: Silver was fixed on the London Bullion Market at US$4.84 an ounce last Friday afternoon against US$4.785 the previous week.

PLATINUM and PALLADIUM: By last Friday, an ounce of platinum had firmed to US$618 on the London Platinum and Palladium Market from US$603 the previous week. Palladium rose to US$267 per ounce from US$236.

BASE METALS: Base metals prices rose in response to glimmers of hope seen in US economic data and strong demand for market leader copper.

On the London Metal Exchange (LME), three-month copper prices rose to US$1,642 per tonne from US$1,607 the week before. Three-month nickel prices rose US$410 per tonne to US$7,910 per tonne.

Three-month aluminium prices dipped US$5 per tonne to US$1,353. Elsewhere in the complex, three-month lead prices added US$2 per tonne to US$446, tin won US$65 per tonne to US$4,435 and zinc prices firmed US$11 per tonne to US$785.

OIL: On Friday, the price of benchmark Brent North Sea crude oil for February delivery stood at US$29.88 a barrel, against US$30.22 a week earlier.

In New York, February-dated light sweet crude futures traded at US$31.99, down from US$32.57 a week earlier.

RUBBER: In Kuala Lumpur, the RSS index rose to RM3.280 per kg from RM3.185 the previous week.

COCOA: On Liffe, London's financial futures exchange, the price of cocoa for May delivery climbed to 1,380 a tonne on Friday from 1,362 the previous week. On the CSCE, the New York futures market, the May contract gained to US$2,137 per tonne from US$2,082.

COFFEE: On the CSCE market, Arabica for March delivery fell to 62.70 US cents a pound last Thursday from 64.05 US cents the previous week.

On Liffe, Robusta quality for March delivery fell to US$825 a tonne last Thursday from US$845 the previous week.

SUGAR: On Liffe, a tonne of white sugar for March delivery rose to US$218 last Thursday from US$214.6 a week earlier.

On the CSCE, a pound of unrefined sugar for March delivery fell to 7.59 US cents from 7.69 US cents the previous week.

SOYA: On the Chicago Board of Trade (CBoT), a bushel of soya for January delivery advanced to 586.50 US cents last week from 584.50 US cents the previous week. Soyabean meal - used in animal feed - for January delivery fell to US$168.8 per tonne last week from US$171 the previous week.

Allendale analyst Joe Victor in Chicago said prices had shot up after China delayed signing the deal with Argentina.

The market received further bad news in the form of statistics from the US agriculture department, whose weekly export figures showed that 386,000 tonnes of soya had been exported.

GRAINS: Grain prices nudged higher, helped by an order placed by Egypt for 180,000 tonnes of soft winter wheat from the US.

But prices pared gains in response to disappointing weekly US export figures from the US agriculture department and an increase in subsidies to European wheat exporters, said Dan Cekander, US-based analyst with brokerage firm Fimat.

In Chicago a bushel of wheat for March delivery rose to 329 US cents last Thursday from 328.75 US cents a week earlier. A bushel of maize in Chicago for March delivery gained to 243.50 US cents from 237 US cents the previous week.

On Liffe, the price of a tonne of wheat for January delivery increased to 59.30 from 58.75 a week earlier.

COTTON: Cotton prices slipped back from recent highs as large speculative flows offset strong US export figures.

'Cotton prices are at high levels at the moment, but the market is a bit wary because of a very large speculative volume,' said Refco analyst Philippe Pesque.

In New York, the March contract fell to 51.06 US cents a pound last Thursday from 52.01 US cents the previous week.

The Cotton Outlook Index of physical cotton, the average of the world's lowest prices, inched up to 56.70 US cents from 56.50 US cents.

WOOL: Australian wool prices got off to a flying start when auctions re-started last week.

'The resumption of auction sales after a three-week break saw prices increase by 2 per cent on average,' the Australian Wool Industries Secretariat reported.

'Demand was led by the topmakers during last week. Purchases for China were relatively small, by their standard, and trade expectation is that this may remain so over the immediate period,' the secretariat added. The Australian Eastern index rose to A$11.89 per kg from A$11.65 before Christmas. The British Wooltops index was unchanged at 570 pence. - AFP

www.theage.com.au Monday 13 January 2003, 07:30AM

The OPEC oil cartel agreed Sunday to increase oil production by 1.5 million barrels per day (bpd) in a bid to curb a surge in prices triggered by a strike in Venezuela and the threat of war in Iraq.

The 11-nation Organisation of Petroleum Exporting Countries (OPEC) agreed to raise its combined output ceiling by 6.5 per cent to 24.5 million bpd from next month to try to cool feverish world oil markets.

"We are trying to send a strong message to consumers that we are doing our utmost to stabilise the whole market," OPEC President Qatar Oil Minister Abdullah bin Hamad al-Attiyah said.

He said the Venezuelan crisis had taken over two million bpd of oil off world markets, adding that OPEC would roll back the output hike once Venezuelan exports recovered.

"We will respond very quickly when Venezuela reaches a quantity that will accommodate their market share," Attiyah said.    advertisement       advertisement

The quota increase is spread across the 10 OPEC members excluding Iraq, boosting Venezuela's ceiling to 2.82 million bpd, although Attiyah said the South American country was currently only producing 700,000 million bpd.

The new quotas also give top producer Saudi Arabia room to sell 488,000 more barrels of oil, with a quota rising to 7.96 million bpd and for the next largest producer Iran to sell 220,000 more barrels of oil with a quota of 3.6 million bpd.

The slump in Venezuelan exports has sent prices soaring above OPEC's 22-28 dollars per barrel target price.

Crude prices surged above 30 dollars a barrel in London, even reaching 33 dollars in New York recently, before easing back slightly.

Although high oil prices boost producers' revenues, OPEC is concerned that a price spike would jeopardise a global economic recovery and prompt consumers to switch to alternative sources of energy, thereby depressing oil demand.

www.afxpress.com

VIENNA (AFX) - The OPEC oil cartel agreed Sunday to increase oil production by 1.5 mln barrels per day (bpd) in a bid to curb a surge in prices triggered by a strike in Venezuela and the threat of war in Iraq.

Here are excerpts from OPEC's statement after their 11 nations met at their headquarters in Vienna:

-- "The Conference (OPEC) reiterated its hope that a swift and peaceful resolution of the present situation in Venezuela could be found."

-- "Having reviewed the oil market situation, especially the demand/supply picture for the first quarter 2003, and in light of the impact of the supply shortfall on price volatility, the Conference decided to raise the OPEC-10 ceiling from 23 mln barrels per day (bpd) to 24.5 mpd, with effect from February 1, 2003, in order to ensure adequate supplies of crude oil to consumers and restore balanced market conditions.

In this regard, the Conference extends its support to Venezuela in its efforts to restore its market share. The adjusted ceiling will be reviewed at the next Ordinary Meeting of the Conference, which Ministers re-confirmed would take place on March 11, 2003."

-- The Conference remains determined to take whatever measures, as and when deemed necessary, to maintain oil price and market stability, and states that the market will be continuously and carefully monitored."

washingtontimes.com

     VIENNA, Jan. 12 (UPI) -- OPEC said Sunday its members had agreed to boost oil production targets by 6.5 percent to 24.5 million barrels a day.

     The oil cartel's decision was prompted by a shortfall in oil exports from Venezuela, which has been hit by protests against President Hugo Chavez.

     OPEC President Abdullah bin Hamad Al Attiyah said the decision would take effect Feb. 1.

     The Organization of Petroleum Exporting Countries will now increase its production by 1.5 million barrels a day, Saudi Oil Minister Ali al-Naimi said.

     Oil prices have hit about $30 a barrel following a cut in supply from Venezuela, which has been hit by a nationwide general strike against Chavez, and a possible U.S. war on Iraq.

     Last week, crude prices in New York hit above $33 a barrel.      Al-Naimi said OPEC members were pumping more oil to replace the shortfall caused by Venezuela.

     "There is no shortage," he said. "We never allowed the shortage to take place.

     "There is a significant shortage from Venezuela, but there is no shortage in the international market."

     A six-week strike in Venezuela has hit oil production and other sectors of the economy.

     The 11-nation OPEC controls 80 percent of the world's oil reserves, but pumps one-third of global supply.

     OPEC increased its quota by 1.3 million barrels to 23 million barrels per day beginning Jan. 1, and another boost could leave the cartel vulnerable to being caught on the proverbial limb in the form of a saturated market if the political situation in Venezuela is sorted out and the state oil company, PDVSA, resumes full production.

     The increase is not an arbitrary decision. OPEC has a mechanism in place that is based on an average price of $22-$28 per barrel for a "basket" of various crude varieties produced by member nations.

     If the price slips below the $22-$28 price band for 20 consecutive days, production is reduced accordingly. If the price goes above the band, production is increased. OPEC said its basket price topped $30 per barrel last week and was $30.71 last Monday.