By Myra P. Saefong, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 3:20 PM ET June 6, 2003

SAN FRANCISCO (CBS.MW) -- Oil futures closed above $31 a barrel Friday to end the week with a 6 percent gain ahead of OPEC's decision on production levels next week.

On the New York Mercantile Exchange, crude for July delivery traded as high as $31.15 a barrel, a level not seen in futures prices since April 1. The contract closed at $31.28 a barrel, up 54 cents. It ended last week at $29.56.

July unleaded gasoline also rose by 0.83 cent to close at 89.35 cents a gallon and July heating oil closed at 78.18 cents a gallon, up 0.95 cent.

OPEC members are scheduled to consider production targets at their meeting June 11 in Doha, Qatar.

Over the past week, "OPEC members have been sending mixed messages on whether they should cut at next week's meeting," Michael Fitzpatrick, an analyst at Fimat USA told clients in a note Friday.

Some oil producers have said they'll push for a quota cut, while others said a reduction isn't needed at this time with prices still in the cartel's $22 to $28 a barrel target range for its basket prices of seven types of crude oils.

Among those arguing that a cut isn't needed are Indonesia and Venezuela, according to Fizpatrick.

But on Thursday, Kuwait reportedly said it will urge its fellow OPEC member nations to adopt another production cut. A day before that, Qatar said the cartel won't likely change the quota, according to news reports.

And it was on Tuesday that OPEC President Abdullah al-Attiyah was quoted as saying the cartel might not need to cut production because Iraq's output hasn't resumed at prewar levels.

Still, "all indications suggest OPEC is ready, willing and able to cut production at a moment's notice," said Phil Flynn, senior analyst at Alaron Trading in Chicago.

Non-OPEC member weighs in

OPEC may get help from non-OPEC producer Mexico, Flynn said.

The "group of three" -- Saudi Arabia, Mexico and Venezuela -- were meeting in Madrid on Friday.

After the energy futures market closed, no news on the Madrid meeting surfaced.

Tim Evans, senior analyst at IFR Pegasus in New York, takes the lack of news from the meeting as a "neutral to bearish" sign.

"If they had something bullish to report, we are sure they would publicize it," he said.

Still Evans said the Saudis and Venezuelans can "sweet talk" the Mexicans all they want, "but if OPEC is not cutting quotas, then Mexico is unlikely to reduce either production or exports on their own."

Iraq uncertainty lingers

OPEC also has a tough decision to make with uncertainty surround Iraq's oil production.

Iraq reportedly received a great deal of interest in the planned sale of about 10 million barrels of oil that's currently in storage. Read the Financial Times story.

But news that northern oil exports may be shut down for two months has surfaced on reports that thieves stole pipeline equipment that links Iraqi oil fields to the world market, said Alaron's Flynn.

Evans noted that the 10 million-barrel tender out of storage would "certainly give the market something to chew on" as it ponders Iraq's return to the "ongoing export market."

U.S. supplies climb

On another front, recent concerns of tightening U.S. supplies were eased quite a bit Wednesday when the Energy Department reported a 2.3 million-barrel rise in motor gasoline inventories last week. Separately, the API pegged the size of the week's increase at 3 million barrels.

Even after the latest build, however, total gasoline inventories stand at 207.3 million barrels -- 5.2 percent below their year-ago level, the government said.

The Energy Department said refinery utilization rose 2.8 percent from the previous week to 98 percent of capacity. The American Petroleum Institute said refineries were running at 97.2 percent of capacity, up from 94.9 percent a week earlier.

Crude-oil refinery inputs were at 16.1 million barrels per day -- their highest level ever recorded, the government said.

Meanwhile, crude inventories rose 2.8 million barrels to 289 million barrels in the latest week, the Energy Department said. Total supplies remain 11.4 percent below the year-ago level. The API reported a 2 million-barrel rise to 288.4 million barrels. See full story.

Crude imports rose by nearly 500,000 barrels per day last week to average more than 10.5 million barrels, the government said, adding that the rise is likely due to the "relatively large" imports from Saudi Arabia and higher imports from Venezuela.

IFR Pegasus' Evans said the lack of Iraqi oil "does not put the market in a deficit, as the 10.5 million barrel per day in U.S. imports last week should attest."

Evans believes the oil market is already "essentially dead, it just doesn't know it yet."

"It can turn lower now, or crash and burn from a higher altitude later, but it cannot sustain the current level in our view," he added.

Natural gas prices fall back

Elsewhere on Nymex, natural gas for July delivery fell by 1.1 cents to close $6.51 per million British thermal units following a triple-digit increase in last week's supplies. A week ago, prices closed at $6.25.

Many energy experts believe the natural-gas market is overbought "particularly without any broad-based heat wave around to boost air conditioning demand," said Fimat's Fitzpatrick.

Early Thursday, the government said natural-gas supplies in storage rose by 114 billion cubic feet during the week ended May 30. Market estimates called for a build of 95 billion to 110 billion cubic feet.

Total supplies of 1.199 trillion cubic feet in storage are still 755 billion cubic feet less than the year-ago level and 484 billion below the five-year average, the Energy Department said.

In the equity arena, oil-service shares traded lower, as reflected by activity in the Philadelphia Oil Service Index ($OSX: news, chart, profile). See Energy Stocks.

Elsewhere, Nymex gold futures ended the week with about a $1-an-ounce loss on the back of an upbeat unemployment report. See Metals Stocks.

The Reuters/CRB Index, a broad-based measure tracking commodity futures prices, rose by 0.5 percent to 237.4. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

More FUTURES MOVERS •Oil futures close below $31 4:12pm ET 06/13/03 •Nymex oil closes under $32; natural gas drops 10% 3:28pm ET 06/12/03 •Oil closes atop $32; stocks fall, OPEC output untouched 3:11pm ET 06/11/03 •Oil futures close higher; OPEC summit in closer view 3:42pm ET 06/10/03 •Oil prices close off a three-month high 3:57pm ET 06/09/03

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June 6 (<a href=quote.bloomberg.com>Bloomberg) -- Oil ministers from Saudi Arabia, Venezuela and Mexico are gathering today in Madrid for a meeting to discuss crude oil prices and consider the return of Iraqi crude to world markets.

The meeting precedes a gathering Wednesday of OPEC in Doha, Qatar, to consider whether to reduce supply. Crude oil in New York has risen 20 percent in the past month to more than $30 a barrel, reducing expectations of a cut. Saudi Oil Minister Ali al-Naimi, in Madrid today, wouldn't comment on the meeting.

Saudi Arabia, Venezuela and Mexico, which isn't a member of the Organization of Petroleum Exporting Countries, have consulted on oil policy since 1998, helping to lift prices from $10 a barrel in December of that year. They are usually among the top five suppliers to the U.S., the world's biggest oil consumer.

Venezuelan oil minister Rafael Ramirez said the meeting in Spain would ``establish cooperation in case there is an oil cut,'' Venezuela's state news agency Venpres reported yesterday. According to Venpres, the meeting was scheduled for Monday.

Ten OPEC members, all except Iraq, agree to restrain oil output to bolster prices. OPEC's oil benchmark last went for $26.77 a barrel, toward the upper end of the group's target range of $22 and $28 a barrel.

Meetings between Saudi Arabia, Venezuela and Mexico have sometimes led to pledges to cut supplies from OPEC and outside producers. The trio met in April 2002 to discuss the oil market in the Mexican coastal resort of Puerto Vallarta. That meeting didn't result in any output-cut pledges.

Mexico's energy minister, Ernesto Martens, said on May 29 that his country will announce on July 15 whether it will increase or reduce oil exports, El Financiero newspaper reported. There are signs demand may decline, the minister said.

OPEC, which pumps a third of the world's oil, has already agreed to lower supply by 2 million barrels a day to 25.4 million barrels a day starting June 1.

Reuters, 06.06.03, 2:35 AM ET (Adds close in Japan and other markets, updates prices) By Raju Gopalakrishnan SINGAPORE, June 6 (Reuters) - Japanese shares surged to their highest levels in months on Friday, but the rally in most other Asian stock markets lost steam as investors awaited more clues on the U.S. economic recovery story. The euro remained firm against the dollar at about $1.1845 <EUR=> after ticking up in the aftermath of Thursday's widely anticipated half-point interest rate cut by the European Central Bank. Gold prices slipped after surging on Thursday on the strength of the euro, and oil futures were firm after rising on more talk of OPEC supply cuts. After a week of the best gains seen this year, most Asian stock markets sobered as profits were cashed in ahead of the weekend and U.S. jobs data later in the day. The keenly awaited indicator should provide clues on the timing and strength of the recovery in the world's biggest economy. But Japanese shares did not pause. The Nikkei average <.N225> ended 1.49 percent up at 8,785.87 points, the highest close since January 23, as steel and chemical shares caught up with the earlier rally led by tech and auto stocks. The broad TOPIX index hit a six-month high. "The high level of market energy, reflected in a rise in trading volume, is having a positive impact on investors," said Yusuke Sakai, manager of equities at Mizuho Securities. "If the buying focus returns to high-tech issues, that would easily prop up the Nikkei average above 8,800." Markets in Australia <.AXJO>, Singapore <.STI>, Hong Kong <.HSI> and Taiwan <.TWII> were little changed. Indian shares <.BSESN> were up 0.87 percent after the onset of the much-awaited annual monsoon. South Korea <.KS11> was closed for a holiday. JOBS OUTLOOK CLOUDY The United States is to announce the May jobs report later on Friday and analysts expect unemployment in the month to have risen to 6.1 percent from April's 6.0 percent. But sizable statistical revisions and uncertainty about how quickly the recent rebound in confidence will induce firms to begin hiring again have left many in the market not knowing what to expect. On Thursday, the U.S. government said applicants for initial jobless benefits rose last week to 442,000, the highest level in more than a month. Economists had forecast 420,000 new jobless claims and the weekly figure raised some anxiety before the monthly report. To offset the gloom, an upbeat sales forecast by Intel Corp (nasdaq: INTC - news - people) offered cheer to technology companies in Asia. Intel is the world's largest semiconductor manufacturer and its forecasts are widely viewed as an indicator of demand in the PC industry. In its report issued after Wall Street closed on Thursday, Intel narrowed its revenue forecast but said sales of its microprocessors, chipsets and motherboards, which account for more than 80 percent of total revenue and are included in most personal computers, were "trending to the high end of the normal seasonal patterns". In the currency markets, the dollar crept lower against the yen, but quickly moved back to about 117.85 <JPY=> by 0615 GMT from 117.30 yen as intervention fears resurfaced. AUSTRALIAN DOLLAR STRONG The Australian dollar <AUD=> broke above 67 U.S. cents for the first time since July 1999 after the Reserve Bank of Australia governor said the local currency's rally had not been excessive. But it fell back after Governor Ian Macfarlane said he could cut rates if the world economy did not improve. U.S. Treasuries firmed slightly in Asia after slipping overnight ahead of the jobs report. The benchmark 10-year note <US10YT=RR> was last at 102-21/32 for a yield of 3.31 percent, down from 3.34 percent in late New York trade. Spot gold <XAU=> was weaker as the euro came off its highs, inching down in Asian trade to about $366.90 per ounce from about $368.75 in late New York. Front-end NYMEX oil futures were flat at $30.74 per barrel after gaining 69 cents on Thursday, boosted by news that two key OPEC oil ministers would meet their counterpart from non-aligned Mexico. The talks between Saudi Arabia's Ali al-Naimi, Venezuela's Rafael Ramirez and Mexico's Ernesto Martens will come ahead of next week's OPEC meeting. The three countries were the architects of drastic oil curbs in 1998 and 1999.

Thu June 5, 2003 11:16 PM ET By Raju Gopalakrishnan

SINGAPORE (<a href=reuters.com>Reuters) - Asian stock markets were mixed on Friday with some investors locking in profits after strong gains this week and others awaiting U.S. payroll data later in the day for more clues on the economic recovery story.

The euro remained firm against the dollar at about $1.1855 after ticking up in the aftermath of Thursday's widely anticipated half-point interest rate cut by the European Central Bank.

Gold prices slipped after surging on Thursday on the strength of the euro, and oil futures nudged higher on more talk of OPEC supply cuts.

After a week of the best gains seen this year, Asian stock markets sobered ahead of the weekend.

Japan's Nikkei average was up a slight 0.19 percent at midday around its best levels since late February. But markets in Australia, Singapore, Hong Kong and Taiwan were marginally down or flat. South Korea was closed for a holiday.

"Investors are unwinding long positions ahead of the weekend and given that we've been rising almost unchecked since last week," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities in Tokyo.

"Also, the market is worried about data on the U.S. economy coming out later today. It could be quite grim," he said.

JOBS OUTLOOK CLOUDY

The United States is to announce the May jobs report later on Friday and analysts expect unemployment in the month to have risen to 6.1 percent from April's 6.0 percent.

But sizable statistical revisions and uncertainty about how quickly the recent rebound in confidence will induce firms to begin hiring again have left many in the market not knowing what to expect.

On Thursday, the U.S. government said applicants for initial jobless benefits rose last week to 442,000, the highest level in more than a month.

Economists had forecast 420,000 new jobless claims and the weekly figure raised some anxiety before the monthly report.

To offset the gloom, an upbeat sales forecast by Intel Corp offered cheer to technology companies in Asia. Intel is the world's largest semiconductor manufacturer and its forecasts are widely viewed as an indicator of demand in the PC industry.

In its report issued after Wall Street closed on Thursday, Intel narrowed its revenue forecast but said sales of its microprocessors, chipsets and motherboards, which account for more than 80 percent of total revenue and are included in most personal computers, were "trending to the high end of the normal seasonal patterns."

In the currency markets, the dollar crept lower against the yen, but quickly moved back to about 117.90 by 10:45 p.m. EDT Thursday from 117.30 yen as intervention fears resurfaced.

The Australian dollar broke above 67 U.S. cents for the first time since July 1999 after the Reserve Bank of Australia governor said the local currency's rally had not been excessive.

U.S. Treasuries firmed slightly in Asia after slipping overnight ahead of the jobs report. The benchmark 10-year note was last at 102-18/32 for a yield of 3.32 percent, down from 3.34 percent in late New York trade.

Spot gold was weaker as the euro came off its highs, inching down in Asian trade to about $367.05 per ounce from about $368.75 in late New York.

Front-end NYMEX oil futures were eight cents higher at $30.82 per barrel after gaining 69 cents on Thursday, boosted by news that two key OPEC oil ministers will meet their counterpart from nonaligned Mexico.

The talks between Saudi Arabia's Ali al-Naimi, Venezuela's Rafael Ramirez and Mexico's Ernesto Martens will come ahead of next week's OPEC meeting. The three countries were the architects of drastic oil curbs in 1998 and 1999.

Reuters, 06.05.03, 11:14 PM ET By Raju Gopalakrishnan SINGAPORE, June 6 (Reuters) - Asian stock markets were mixed on Friday with some investors locking in profits after strong gains this week and others awaiting U.S. payroll data later in the day for more clues on the economic recovery story. The euro remained firm against the dollar at about $1.1855 <EUR=> after ticking up in the aftermath of Thursday's widely anticipated half-point interest rate cut by the European Central Bank. Gold prices slipped after surging on Thursday on the strength of the euro, and oil futures nudged higher on more talk of OPEC supply cuts. After a week of the best gains seen this year, Asian stock markets sobered ahead of the weekend. Japan's Nikkei average <.N225> was up a slight 0.19 percent at midday around its best levels since late February. But markets in Australia <.AXJO>, Singapore <.STI>, Hong Kong <.HSI> and Taiwan <.TWII> were marginally down or flat. South Korea was closed for a holiday. "Investors are unwinding long positions ahead of the weekend and given that we've been rising almost unchecked since last week," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities in Tokyo. "Also, the market is worried about data on the U.S. economy coming out later today. It could be quite grim," he said. JOBS OUTLOOK CLOUDY The United States is to announce the May jobs report later on Friday and analysts expect unemployment in the month to have risen to 6.1 percent from April's 6.0 percent. But sizable statistical revisions and uncertainty about how quickly the recent rebound in confidence will induce firms to begin hiring again have left many in the market not knowing what to expect. On Thursday, the U.S. government said applicants for initial jobless benefits rose last week to 442,000, the highest level in more than a month. Economists had forecast 420,000 new jobless claims and the weekly figure raised some anxiety before the monthly report. To offset the gloom, an upbeat sales forecast by Intel Corp (nasdaq: INTC - news - people) offered cheer to technology companies in Asia. Intel is the world's largest semiconductor manufacturer and its forecasts are widely viewed as an indicator of demand in the PC industry. In its report issued after Wall Street closed on Thursday, Intel narrowed its revenue forecast but said sales of its microprocessors, chipsets and motherboards, which account for more than 80 percent of total revenue and are included in most personal computers, were "trending to the high end of the normal seasonal patterns". In the currency markets, the dollar crept lower against the yen, but quickly moved back to about 117.90 <JPY=> by 0245 GMT from 117.30 yen as intervention fears resurfaced. The Australian dollar <AUD=> broke above 67 U.S. cents for the first time since July 1999 after the Reserve Bank of Australia governor said the local currency's rally had not been excessive. U.S. Treasuries firmed slightly in Asia after slipping overnight ahead of the jobs report. The benchmark 10-year note <US10YT=RR> was last at 102-18/32 for a yield of 3.32 percent, down from 3.34 percent in late New York trade. Spot gold <XAU=> was weaker as the euro came off its highs, inching down in Asian trade to about $367.05 per ounce from about $368.75 in late New York. Front-end NYMEX oil futures were eight cents higher at $30.82 per barrel after gaining 69 cents on Thursday, boosted by news that two key OPEC oil ministers will meet their counterpart from nonaligned Mexico. The talks between Saudi Arabia's Ali al-Naimi, Venezuela's Rafael Ramirez and Mexico's Ernesto Martens will come ahead of next week's OPEC meeting. The three countries were the architects of drastic oil curbs in 1998 and 1999.