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To: Platter who wrote (39276)	3/8/1999 4:00:00 PM
From: Platter	Respond to of 95453

N.Y. Crude Jumps to 4-Month High as Saudi Arabia, Iran Agree to Seek Cuts Crude Oil Rises as Iran, Saudi Arabia to Seek Cuts (Update2) (Adds background on Iran in 3rd paragraph and comment and background on OPEC production beginning in 9th paragraph.) New York, March 8 (Bloomberg) -- Crude oil rose more than 5 percent to a four-month high after Saudi Arabia and Iran said they would work together to win further production cuts when the Organization of Petroleum Exporting Countries meets March 23. The joint statement by the two oil producers means ''there is something in the wind that's going to result in less'' oil, said Alan Struth, chief oil economist at Bartlesville, Oklahoma- based Phillips Petroleum Co. Saudi Arabia and Iran said more production cuts are needed to boost prices that have fallen about 35 percent in the last two years. Iran's statement was significant because OPEC contends the country has been the group's biggest over-producer. April crude oil rose as much as 73 cents, or 5.5 percent, to $14.03 a barrel on the New York Mercantile Exchange, the highest price since Nov. 13. In London, April Brent rose as much as 58 cents to $12.14 a barrel on the International Petroleum Exchange. Oil prices have risen 12 percent in the past week, boosted by an unexpected drop in U.S. inventories and speculation that OPEC may agree to further output cuts. Prices are half what they were in January 1997, when they reached a six-year high. While crude oil inventories have fallen close to year-ago levels, according to the American Petroleum Institute, it will take some time to work through gasoline inventories that are about 5 percent higher than a year ago before the start of the warm-weather driving season. Excess heating oil inventories have weighed on crude oil prices in recent months as mild weather reduced demand. U.S. heating oil inventories as of Feb. 26 were 20 percent higher than a year earlier, according to the API. Oil products also gained. April gasoline rose as much as 1.85 cents, or 4.5 percent, to 43.25 cents a gallon on the Nymex; while April heating oil rose as much as 1.85 cents, or 5.3 percent, to 36.60 cents a gallon. 'First Step' World oil producers need to reduce output by about 1 million barrels a day to bring supply and demand into balance, Struth said. While Struth said he was skeptical OPEC would agree to further cuts this month, the joint statement from Iran and Saudi Arabia is ''a good first step. We'll take it.'' In February, 10 OPEC members, excluding Iraq, achieved 79 percent of their goal of reducing output by a combined 2.6 million barrels a day, according to Bloomberg estimates. Saudi Arabia, OPEC's biggest producer, met 92 percent of its promised cutback of 725,000 barrels a day, while Iran's compliance is being disputed. Iran achieved only 1 percent of its promise to reduce production by 305,000 barrels a day from a February 1997 base line computed by OPEC. Iran contends that it already has met the goal when the change in its daily output is computed using its own base line figure. The question is, ''Are the Iranians going to cut and what level are they going to cut from?'' Struth said. ''The devil's still in the details.'' Phone Call The joint Saudi-Iranian statement was issued after a telephone conversation between Saudi Crown Prince Abdullah bin Abdel Aziz and Iranian President Mohammad Khatami, the Saudi Press Agency said. Iran and Venezuela, OPEC's second- and third-largest producers, are to meet in Venezuela before the OPEC meeting to discuss oil production cuts, Iranian officials said. Iranian Foreign Minister Kamal Kharazi will meet with Venezuelan President Hugo Chavez and Energy and Mines Minister Ali Rodriguez during his trip to Caracas March 17-18, a spokesman at the Iranian Embassy said. Venezuela's oil workers union said the government had indicated it won't agree to new production cuts. Still, Nauman Barakat, vice president of futures investments at Prudential Securities in New York, said he was ''doubtful about this until we hear the official word from the (Venezuelan oil) ministry.''