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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Redman who wrote (21476)	5/5/1998 5:12:00 PM
From: pz	Read Replies (1) \| Respond to of 95453

NEW YORK, May 5 (Reuters) - Crude oil futures retreated on the New York Mercantile Exchange (NYMEX) Tuesday as market hopes that top producers were planning further output cuts waned, traders said. The hopes of any quick action by the Riyadh Pact group -- Saudi Arabia, Venezuela and Mexico --- were dashed when Mexico said its Energy Minister, Luis Tellez, would not meet with Saudi Oil Minister Ali al-Naimi this week and that no production cuts were under consideration. "The market is drifting, because what it hoped for did not happen," said Kevin Riordan, analyst at Chicago-based Fox Investments. NYMEX June crude settled at $15.47 a barrel, down 48 cents, climbing from the day's low of $15.23. The contract broke minor support in the $15.60-$15.74 range shortly after the opening, after hitting a high of $15.83. Refined products also fell, dragged down by crude's performance. June heating oil settled at 44.30 cents a gallon, down 1.12 cents while gasoline ended at 53.33 cents a gallon, off 0.71 cent. Speculation that the Saudi, Venezuelan and Mexican oil chiefs were going to meet last weekend propelled June crude to more than $16 on Friday. No such meeting took place and NYMEX crude and refined products tumbled Monday and then extended loses Tuesday. The presence of al-Naimi in the U.S. to attend a Saudi Aramco meeting in Houston and confer with U.S. Energy Secretary Federico Pena Monday fueled the speculations. A Gulf source has told Reuters in Kuwait, however, that contacts between the Saudi, Venezuelan and Mexican oil chiefs were continuing and that there could be a meeting in a couple of weeks. "I consider that potentially positive for the market," said a NYMEX trader, but in the meantime, he said, those who bought on rumors of a possible meeting "may be fidgeting right now." Al-Naimi, Venezuela's Erwin Arrieta and non-OPEC Mexico's Tellez crafted the Riyadh agreement of March 22 calling for a 1.5 million barrel per day (bpd) cut in oil output between OPEC and non-OPEC producers. OPEC members pledged cuts of about 1.245 million bpd while non-OPEC members led by Mexico pledged about 270,000 bpd. China and Russia later said were cutting production by 150,000 and 61,000 in support of the agreement. From a peak of $17.50 after the Riyadh pact was announced, crude prices have slipped as concerns over a global glut reemerged. The prices are currently down about $4.50 from their average in 1997. On April 27, Venezuela said the market needed further output cuts of 500,000 bpd to lift prices. And a number of OPEC oil ministers have said they will support moves to cut output. But some analysts noted that OPEC still had to get an initial reading of how participants to the Riyadh pact carried out their pledges before any more steps are taken to bolster prices. In the meantime, al-Naimi is expected to meet fellow Arab oil ministers at a conference of the Organization of Arab Petroleum Exporting Countries (OPEC) in Syria on May 10 to discuss market conditions and whether further cuts were needed to lift oil prices. In the meantime, traders were awaiting release of weekly stocks inventory data by the American Petroleum Institute, which is considered a short-term market weather vane.