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To: John Paquet who wrote (903)	7/5/1999 6:47:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 1239

Brent Oil Breaks $18 As OPEC Cuts Bite 12:47 p.m. Jul 05, 1999 Eastern By Richard Mably LONDON (Reuters) - Oil prices powered higher again Monday driven by bullish sentiment surrounding strict OPEC adherence to supply limits agreed earlier this year. London August futures for benchmark Brent jumped 51 cents to $18.17 a barrel, the highest oil price in 18 months and the bottom end of OPEC's $18-$20 target price range. Market observers said evidence that the cartel's stringent output limits, in place since April, were eating into surplus stockpiles in the West was the main factor behind a rally which has added $8 to the price of oil from February's historic lows. ''In our view, the short-term world supply/demand balance is inexorably turning in OPEC's favor,'' said finance house Dresdner Kleinwort Benson. ''There is every prospect of an accelerating inventory drawdown as the fourth quarter approaches,'' it added. Major OPEC producer Iran said Sunday that it expected oil prices to continue rising as a result of producer adherence to the supply curbs forged with non-OPEC exporters. Iran's OPEC governor Hossein Kazempour Ardebili said estimates were that OPEC compliance with the output cuts, totaling 4.3 million barrels a day, was running at 93 percent. ''We are very impressed by the level of compliance and we are confident that producers are going to fully abide,'' he said. Data from the United States last week showed falling crude stocks and demand for gasoline and other petroleum products rising faster than forecast. Recovery in Asian demand has also bolstered the view among oil market speculators that a hefty decline in global petroleum stockpiles will force prices even higher later in the year. ''Fairly strong signs of a recovery in demand in Asia have helped lead the market higher,'' said David Knapp, head of the markets division at the International Energy Agency in Paris. ''With Asian demand looking better and given reasonable compliance by OPEC on output cuts the prospects are good for a significant draw in inventories in the remainder of the year.'' Some analysts think the rapidity of the price rally may require a decision by OPEC at its September meeting on the timing of any upward adjustment to output quotas which would otherwise remain in force until the end of March next year. ''OPEC may need to take stock of the situation if prices rise too high ahead of its September meeting,'' said Kleinwort Benson. An upward revision in quotas cannot be ruled out.'' Dealers also were keeping an eye on the threat of tariffs on imported oil from four major producers into the United States. A group of independent American oil producers last week requested the U.S. government to investigate whether foreign nations dumped oil in the United States at below fair market value late last year and in early 1999. The group is seeking countervailing duties against the four targeted countries Saudi Arabia, Mexico, Venezuela and Iraq which together account for just over half of the nine million barrels daily of U.S. oil imports. Copyright 1999 Reuters Limited.