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To: Czechsinthemail who wrote (24588)	6/23/1998 2:23:00 PM
From: pz	Respond to of 95453

Tuesday June 23 1:38 PM EDT OPEC weighs larger cut to lift weak oil prices By Steve Swindells VIENNA, Austria (Reuters) - OPEC producers signaled readiness Tuesday to consider cutting oil output by more than expected to revive prices ravaged by excess supply. Persian Gulf sources said OPEC kingpin Saudi Arabia would consider further output reductions beyond those to which it had already committed provided other petroleum powers adhered to their own promised cuts. "All producers really have a problem -- we must be honest and frank with each other," an OPEC delegate said. Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said he expected fresh OPEC production cuts to match the 1.245 million barrels per day (bpd) the cartel earlier pledged to withdraw from the market beginning April 1. Delegates cautioned that the thorny issue of compliance with output reduction commitments could yet complicate urgent attempts by the Organization of the Petroleum Exporting Countries to lift a market mired in surplus crude. But a Venezuelan delegate said he also saw OPEC disposed to withdraw more oil beyond the 800,000 bpd now on the table. "In general there is a willingness to do something extra," he said. Saudi Arabia was taking the initiative in securing the extra reductions at OPEC's summer meeting Wednesday, a senior non-Saudi delegate said. "Eight hundred thousand barrels per day is short -- if you look at the market fundamentals, you should probably be aiming at 1-1.3 million barrels per day," the non-Saudi delegate said. The comments lifted prices on the futures markets that arbitrate the cost of world energy, with benchmark Brent crude trading 41 cents stronger at $13.65 a barrel in London. But prices remain little stronger in real terms than those prevailing when a band of Third World producers formed the organization in 1960 to get a better deal for sellers. Venezuela's Erwin Arrieta warned the market would not recover no matter what was said at the gathering if producers continued to pump in excess of demand. "If you supply more than the market needs, there will not be any reaction," he said in Brussels before coming to Vienna. Prices fell to a 10-year low in March after an OPEC decision last year to hike output limits just as Asian demand began to falter. But even with oil prices at 25-year lows in real terms, OPEC is struggling to convince a doubting market that it has buried its cheating past. OPEC insiders estimate the March cuts drew only 75 percent compliance, a typical performance from the 38-year-old commodity club with a patchy record of output discipline. A bout of arm-twisting was in prospect as delegates seek to persuade fellow producers suspected of failing to meet reduction targets to turn down the taps. "It's probably correct to make the assumption that OPEC cannot do much more than two-thirds of what is pledged," said a delegate taking pre-conference soundings in hotel lobbies. Non-members Mexico and Oman have backed the new proposed cuts by offering 120,000 bpd in their own reductions. But both Norway and Russia, attending as observers along with Mexico and Oman, have said they have no plans for more sacrifices. Ministers are due to meet formally for the first time on Wednesday following a meeting Tuesday morning of OPEC's market monitoring committee that will examine the extent of oversupply. OPEC's problem is that while world demand is still rising, the rate of demand growth has slowed sharply this year. Asia's financial crisis means producers can no longer rely on any incremental demand from the region, which in recent years has accounted for about 50 percent of the globe's extra oil consumption.