Thursday March 11 5:34 PM ET
Oil Prices Retreat As OPEC Stumbles
By Atiya Hussain
NEW YORK (Reuters) - Oil prices stalled and fell back Thursday as officials from top oil
producers haggled in Amsterdam over a deal to cut production, trimming gains in oil shares, too.
April crude oil futures on the New York Mercantile Exchange settled 38 cents weaker at $14.31
a barrel, giving back some of the gains which pushed prices up nearly 30 percent in the past few
weeks.
The jittery crude market posted most of the day's losses after Alvaro Silva, deputy oil minister
of Venezuela, a key member of the Organization of the Petroleum Exporting Countries (OPEC),
reiterated that production cuts should come from other producers.
Oil ministers from OPEC members Saudi Arabia, Iran, Algeria and Venezuela, as well as
high-level officials from non-OPEC producer Mexico, were to carry their talks through to
Friday in an effort to reach agreement.
Saudi Arabia and OPEC's Gulf Arab members agreed last weekend to make ''substantial,'' but
as yet unspecified, cuts in production to reverse a world oil glut. A Gulf OPEC delegate told
Reuters Wednesday that they were looking for a cut of 2.3 million barrels per day, or about 3
percent of world production.
''It's been a very surprising set of occurrences: The move to reduce production within OPEC,
especially on behalf of Saudi Arabia and Iran,'' said Douglas Terreson, an analyst at Morgan
Stanley Dean Witter, adding that oil-sector shares ''can go another 5 (percent) to 7 percent
higher.''
(snip)
Some analysts struck a note of caution, saying that the oil market, so closely tied to the
performance of many oil companies, is already showing skepticism.
''There's not a lot of confidence that you'll see the oil cuts going through,'' explained one oil
market analyst, who did not want to be quoted.
''The stocks will be crushed if (OPEC) doesn't go through because things are really bleak at the
companies. The prices they have been seeing are pretty much the worst since 20 years,'' the
analyst continued.
Roger Diwan, an oil market analyst at Petroleum Finance Corp., agreed, noting that OPEC could
have ''a terrible problem of credibility with a big production-cutting deal'' because of its failure
to comply with the cuts it approved last year.
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