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Friday November 10, 5:26 pm Eastern Time OPEC Expected To Forego Increases By BRUCE STANLEY AP Business Writer LONDON (AP) -- Despite tight supplies in world oil markets, OPEC is expected to forego any increase in crude production when its members meet Sunday to assess market conditions. Consumers subsequently should not count on seeing prices for heating oil or gasoline fall any time soon, some analysts say. OPEC's official line is that it will stick to the quotas it adopted last month, and energy analysts say the cartel probably won't adjust its output level before the end of the year. In fact, when it does decide next to modify its output, the Organization of Petroleum Exporting Countries is more likely to cut back on crude production than to raise it. Oil ministers from OPEC's 11 member nations are meeting this weekend in Vienna, Austria. It is their fourth policy meeting of the year -- an unusually intense schedule. OPEC is keen to appease the United States and other key importers that have demanded relief from expensive crude, yet it also fears pumping too much oil and causing prices to plunge. The cartel decided to pump an additional total of 3.2 million barrels a day at its three previous meetings, and it added 500,000 more at the beginning of this month after prices remained above a key benchmark for 20 consecutive days. OPEC president Ali Rodriguez has ruled out further increases at Sunday's meeting, however. ``There won't be a change in oil output policy,'' he said Friday in Vienna. Rodriguez, who also is Venezuela's oil minister, often speaks on behalf of the group, although OPEC members still must reach a formal consensus on what action, if any, to take. OPEC produces almost 40 percent of the world's crude, with an official output of 26.7 million barrel a day. It actually produces much more: 29.5 million barrels in October, according to the Paris-based International Energy Agency. That hasn't been enough to ease energy prices back from some of the highest levels reached since the Gulf War. Heating oil futures jumped 6 percent Thursday to $1.016 a gallon on the New York Mercantile Exchange, sparked by an IEA report noting ``serious concerns'' about low fuel inventories as winter approaches, though dipped slightly to $1.008 Friday. Crude futures were trading up 10 cents to $34.02 a barrel on the Nymex, while North Sea Brent crude was trading at $32.02 a barrel on the International Petroleum Exchange in London, down 14 cents. High prices triggered an automatic increase on Nov. 1 of half a million barrels a day in OPEC output, under an arrangement the group's members agreed to beforehand. This arrangement requires OPEC to add 500,000 barrels to its daily production if the average price for OPEC crude exceeds $28 for 20 consecutive trading days. Because prices are all but certain to remain above $28 for another 20 day stretch -- prices for the basket of seven crudes OPEC considers have been hovering around $30 for the past eight days -- OPEC should, in theory, decide to hike production once again in the near future. However, OPEC has been inconsistent in meeting such commitments. Its members argue that bottlenecks at refineries and steep fuel taxes are to blame for high energy prices in many countries and say the world is awash in crude. For these reasons, Peter Gignoux, head of the petroleum desk at Salomon Smith Barney in London, expects OPEC to defer any production hike until at least the end of the year. Many OPEC members already are constrained from producing enough oil to meet their current quotas, making a near-term increase all the more improbable. Iran and Venezuela -- OPEC's second- and third-biggest producers -- are having trouble meeting their targets, as are Indonesia and Nigeria. Libya and Kuwait are barely able to fulfill their existing quotas, said Lawrence Eagles of GNI, a London-based brokerage. ``There aren't going to be any surprise output announcements'' at the upcoming meeting, he argued. OPEC is still haunted by its decision to boost output in December 1997, just before the financial crisis in Asia caused demand to plummet. By December 1998, prices had dropped to around $10 a barrel, wreaking financial havoc on oil-dependent OPEC members. Many OPEC officials worry that this scenario might repeat itself in late winter and early spring, when history suggests demand for crude will slacken. ``Some of these guys are really concerned that prices will collapse in the first quarter. They think that production is still too high,'' said Jareer Elass, managing director of Oil Navigator, a consulting firm based in Washington. ``I just don't think this fear is justified,'' he added. Perhaps the only contentious issue likely to come up at the meeting is the long-delayed choice of a successor to OPEC secretary-general Rilwanu Lukman. Lukman's tenure as OPEC's public face ended in September 1999, and he has continued serving only until group members can agree on who should follow him. That hasn't been easy, with OPEC heavyweights Saudi Arabia, Iran and Iraq unable to agree on a candidate. * ^--------= * http://www.opec.org -------------------------- eGroups Sponsor -------------------------~-~> Create your business web site your way now at Bigstep.com. It's the fast, easy way to get online, to promote your business, and to sell your products and services. Try Bigstep.com now. http://click.egroups.com/1/9183/2/_/837408/_/973957114/ ---------------------------------------------------------------------_-> Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html To unsubscribe, send an email to: [EMAIL PROTECTED]
