THis is what I got
+DJ OPEC Eyes 1 Mln B/D Cut If Price Falls $1 - Sources
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*DJ OPEC Basket Price Of $23 Would Trigger Cut - Sources
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DJ OPEC/1 Mln B/D Cut -2: Committed To Act On Mar 16
By David Bird
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--OPEC ministers are considering a cut in oil
output quotas of 1 million barrels a day if the price of its reference
basket of crudes falls by a further $1 before its March 16 meeting,
OPEC sources said.
That level of decline would put the basket price at around $23 a
barrel, or $2 below the midpoint of OPEC's $22-$28/barrel price range.
While OPEC has the price band in effect, Saudi Arabia, the world's
largest oil producer and exporter, focuses more directly on a $25
target price for the basket.
Currently the basket price is about $4 below the price of U.S.
benchmark West Texast Intermediate crude.
OPEC's basket was quoted at $23.81 a barrel on Wednesday.
OPEC sources said that while ministers are prepared to act to defend
prices in the face of an expected seasonal drop in demand at the start
of the second quarter, the scope of any cut won't be resolved until
ministers meet in Vienna on March 16.
"There's going to be a lot of attention paid to what prices do next
week," said a senior OPEC source.
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DJ OPEC/1 Mln B/D Cut -3: Too Early To Talk Real Numbers
"If there is a continuous drift down in the price, there will be a
need to cut and people are leaning toward 1 million" b/d, said another
senior OPEC source.
Several OPEC sources said they believe prices could fall by about $3
if OPEC decided not to adjust output on March 16.
Ministers decided in January to cut output quotas by 1.5 million b/d
from Feb. 1, in an agreement that was put in place for the remainder
of the year, but subject to review at the March 16 talks.
"It's a little bit early to talk about any real number," said a
senior OPEC source, "but with prices pointing lower, there's a desire
to do something."
This source, though, expressed concern that a cut of 1 million b/d
may push prices up too sharply, and in excess of the $25 target for
the basket price.
"If we don't act, the price will be moving toward the low end of the
band," but if OPEC "overreacts" by cutting too much, prices could move
above $25 for the basket.
"It's a dilemma. We really have to fine-tune it," this source said,
predicting that a cut of around 700,000 b/d in output quotas may be
more likely.
"A cut of 1 million b/d would mean we'd have to see real cuts by
everybody in OPEC," said this source, who said he didn't think this
was likely.
A cut of 700,000 b/d in quotas would probably result in significant
reductions only being made by Saudi Arabia, Venezuela, Kuwait and the
UAE, this source said, resulting in a "real" output cut of "close to
500,000 b/d, at best."
OPEC will be closely watching the state of the U.S. economy and
world oil demand figures before settling on the level of a cut,
sources said.
"If there's no clear guide that demand is going down fast, it will
be difficult" to pick the right level for a cut, one source said. "But
if demand is clearly down, OPEC will be tempted to cut - definitely."
Ministers from Saudi Arabia, Venezuela and non-OPEC Mexico, who
formed the core group which led output cuts in March 1998 to restore
weak oil prices, reportedly will meet over the weekend before the OPEC
meeting.
The oil minister from Mexico, which has decided not to adjust output
in conjunction with OPEC's two most recent moves, said Wednesday he
didn't see the need for adjustments now.
-By David Bird, Dow Jones Newswires, 1-201-938-4423,
david.bird@dowjones.com
(END) DOW JONES NEWS 03-01-01
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